The Government inherited the highest structural budget deficit of any major economy in the world and the highest deficit in our peacetime history. The UK is paying over £120 million every day on debt interest payments alone. Air Passenger Duty (APD) is making an important contribution to reducing the nation’s deficit.
It is right that the aviation industry and its customers pay their fair share of taxes. APD is the primary means of ensuring this since there is no tax on aviation fuel unlike most other modes of transport.
Last year the Government ran a consultation on APD to improve the fairness and efficiency of the way the tax operates. Ministers recognise the importance of the aviation industry which is why the 2011 Budget announced that APD would be frozen for 2011-12 and the inflation-based rise would be postponed until April this year.
I do, of course, recognise the impact this tax has on the cost of family holidays, especially at a time when household spending is being stretched. To ensure fairness, Ministers have closed a loophole so that from April 2013, business jet passengers will also have to pay this tax.
I have discussed APD with Treasury Ministers on a number of occasions and I can assure you that they are very much aware of the issues raised in the current campaign on the tax.
I should add that as a result of the tough choices made by the Coalition on tax and spending, the deficit has started to come down. This reduction, combined with the low interest rates made possible by the Government’s credible action to put the public finances back in order, means that the UK is saving £36 billion in debt interest payments compared to our predecessors.