Tuesday, 15 October 2013

Reader's Letter Of The Day

From this evening's Evening Standard (page 45, 15 October 2013):

AS a non-resident, Sir Richard Branson is not [liable to] UK income tax, and as far as I am aware his main UK business interest, Virgin Atlantic, pays the correct amount of corporation tax.

But there is one area where Virgin Atlantic is sorely under taxed. The airline's five percent share of Heathrow landing and take-off slots is now worth £100 million, although they were originally given away free by the government in the Eighties.

The value of these slots is dictated by Heathrow's location and enforced scarcity. Much of the true cost of air transport is borne by residents under the flight paths, and without publicly funded transport links, Heathrow would be a less attractive destination.

A tax on the slots' value would be fair compensation for public costs, and a good source of revenue, as unlike air passenger duty they would have no impact on ticket prices.

Mark Wadsworth


Kj said...

Well done. I chit-chatted with a Greens pol the other day, and launched the idea that a per passenger duty is pretty silly for both revenue and achieving an agenda purpose, and what alternatives there could be. "Well, yes, but", and came out with the feeling that the idea was more a "moral" one, that each one is to "pay" for what they are doing. There you go...

Mark Wadsworth said...

Kj, at the very least, you would hope that the Greens support a per-plane duty rather than a per-passenger duty.

A tax on the value of landing slots is not actually an environmental thing.

It would be much more than Air Passenger Duty for our biggest airport Heathrow, which is more than half of all flights and Heathrow slots are probably 90% of the value of all UK slots.

At smaller local airports, the value of the slots is very low, and so a tax on them would raise less than the per-passenger duty.

I suppose if the Greens understood the merits of the slot value tax, they would oppose it because it does not change behaviour - it does not push up ticket prices or reduce the number of flights which people take. It might even increase them.

Kj said...

MW: That was what I suggested, a per-plane duty, on top of slot auctions, for the benefit of their agenda. AFAIU, that wouldn´t do much else than push down the slot-values at the big airports with the high throughput, but possibly push up the cost of flights (and reduce demand) at the less desirable airports and cut the least profitable routes.
But as the dialogue suggested, they are not always that much into actual efficency, but more into moralising about consumer behaviour.

Mark Wadsworth said...

Kj: yes, that's what would happen if we had a combination of both taxes. The per plane charge must give us a lower cut off point where some flights no longer take place.

"they are not always that much into actual efficency, but more into moralising about consumer behaviour."

Of course :-)