AVIATION bosses have criticised the Government's proposals for a "Lear jet tax" as damaging to the region.
Chiefs at Newcastle International Airport have said the Chancellor’s current plans for taxing private planes could cut the ability of leading business figures to travel in and out of the region.
While transport leaders accept it is important to ensure the wealthy are paying a “fair share” of tax, they worry that forcing them to do business elsewhere in the country and Europe would stall the North East’s struggling economic recovery.
The concerns will be put to the Government this week, as Newcastle Airport makes its final submissions to the consultation on aviation tax, announced by George Osborne in the budget. The listening exercise officially closes on June 17, and among key issues being reviewed will be Air Passenger Duty (APD), the “unfair” tax which impacts disproportionately on regional airports, and against which The Journal has rallied through our A Tax Too Far campaign.
The first details of the submissions Newcastle Airport intend to make have now been unveiled, and focus on making sure key industry figures retain their ability to jet in and out of the North East.
Newcastle Airport’s official position on APD, described by financial experts as harmful to the region’s business interests, is expected to be released closer to the consultation deadline.
Under current proposals all passengers on business jets of more than 5.7 tonnes would be charged at the highest rate of APD, currently £170, regardless of distance flown.
Graeme Mason, planning and corporate affairs director at Newcastle International, said: “We cannot disagree with the principle of including business jets. However, as it stands, this proposal raises some practical difficulties.
“Many business trips are multi-stage, so it would be wrong to tax each stage at the same rate. And there is insufficient distinction. It doesn’t seem fair to tax a trip to, say, Frankfurt, by the same amount as, say, New York.
“At the proposed rate many trips will become uneconomical and will cease, thus disadvantaging the businesses making those trips. Businesses in more remote regions will suffer more.”
Mr Mason said there was an added concern private jet terminals could be transformed into “tax collectors by proxy”, significantly damaging their appeal to customers.
He added: “In many cases there is no ‘airline’ and thus collection of the tax could fall upon the operator of the business aviation terminal.
“In the case of Newcastle this would be Samson Aviation, a subsidiary of the NIAL. With multiple aircraft, based all over the world, this would become a complicated and costly administrative burden, with Samson effectively becoming a tax collector.
“Samson may even end up collecting more in tax than in other charges, which is no way to run a healthy business and service for the region. If the Government is looking at widening the scope of aviation tax, they should look also at freight flights, and perhaps even at other forms of passenger transport.”
As well as business jets, the Government consultation aims to look at class distinctions, the banding systems for APD – according to distance flown, the impact on regional economies, and whether devolved administrations in Scotland, Wales and Northern Ireland should have the power to decide their own aviation tax policy.
Aviation chiefs have pointed to countries, such as the Netherlands, where the greater impact of the tax on regional airports has been proven.
James Ramsbotham, chief executive at the at the North East Chamber of Commerce, said: “Reforming the way APD is levied will help the Government to rebalance wealth creation around the UK, in particular by stimulating private sector growth in regions such as the North East.”