On January the 4th 2011 VAT will rise to 20%. Whilst the rest of society shoulders the burden of the recent economic crisis, aviation, yet again, will receive special treatment and remain untouched.
The aviation industry currently pays no tax on aviation fuel, no VAT on its transactions, and no duty on its consumer goods sold to non-EC citizens. This amounts to a tax subsidy of £9 billion a year. If this money was collected then the basic rate of income tax could be cut by 2p, or the £9 billion could be spent on public services. To put this in perspective, in 2001 a single person on the national average wage of £25,000 paid an extra £557 income tax in order to meet the costs of the aviation industry’s tax exemptions.
If this trend in tax concessions continues then they will increase to £18.1 billion in 2020 and £22.7 billion by 2030, sucking more money out of communities and public spending at a time when it needs it the most.
For more information check out The Hidden Cost of Flying