US says new plane tax ‘illegal’
11.05.08
The US government has made a blistering attack on a new £2.5 billion aviation duty, questioning its green credentials and claiming that it breaks international law, the Times reports. The criticism was made in an official diplomatic note sent to the Foreign Office by the US embassy in London last month. It said the new charge, proposed in this year’s budget as a replacement for air passenger duty (APD), ‘raises significant policy and legal issues’ and asks whether it can be justified when the government plans a third runway at Heathrow, the newspaper adds.
The new flight levy, which the Treasury says will help reduce greenhouse-gas emissions, is proposed as a replacement for APD, which has been in place for more than a decade. The Treasury wants to change the basis of the duty, moving it from individual passengers to a per-plane basis. The move will increase charges for passengers and could raise £2.5 billion a year for the treasury - none of which is to be spent on environmental projects.
The US diplomatic note said the switch from passengers to planes as the basis for the taxation contravenes the 1944 Chicago Convention, the treaty that governs most of international aviation. It claimed it was also in breach of the open-skies deal hammered out last year between Europe and America.
The Times reports that the Americans also query the basis of the duty, saying the green claims are farfetched. The note says: ‘The Treasury’s proposal, although cast as an environmental measure, appears in reality to constitute nothing more than a device for generating additional revenue from the airline community.'
It adds that the duty is likely to reduce the number of flights from Britain, and that ‘this would seem an anomalous result, given the focus in the UK on, among other things, restoration of the competitiveness of Heathrow with the opening of terminal 5 and the consideration of a third runway.’
'US government sources' told the newspaper that Washington could bring a case against the UK at the International Civil Aviation Organisation, the watchdog for world aviation, or under the disputes procedure of last year’s EU-US open-skies agreement.
The Times says that John Byerly, deputy assistant secretary for transportation and America’s top aviation negotiator, met Treasury officials last week to press home the argument.
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