Tax

CIOT warns of aviation tax reform climate change inconsistency

The group has argued that ‘there may be better ways’ to boost domestic connectivity without ‘sacrificing’ climate targets

The Chartered Institute of Taxation (CIOT) has warned that the treasury’s plan to cut aviation taxes to boost connectivity within the UK is inconsistent with its wider climate change objectives.

The group has argued that “there may be better ways” to boost domestic connectivity without “sacrificing” climate targets.

In its submission to a treasury consultation on aviation tax reform, the CIOT expressed concern that the proposal to cut Air Passenger Duty (APD) on domestic flights “failed” to take into account the scale of the measures that will be required by the aviation industry to support the government’s target of achieving net zero by 2050.

As a result, the institute has recommended that the government reform the tax so that it acts as a “lever” for incentivising the development of green fuel, such as linking the level of APD paid to the type of fuel used.

The institution also recommends that the government publish a climate change tax policy “roadmap”, with the aim of ensuring tax policy changes can be assessed against the government’s 10-point plan.

Jason Collins, chair of the CIOT’s Climate Change Working Group, said: “The government has set itself ambitious and welcome net zero targets, but the proposals in this consultation fail to fully grasp the scale and depth of change required to achieve these. Cutting taxes on flying would appear to run counter to those aims.

“APD needs to be set at a level that ensures the aviation sector contributes its fair share to the achievement of the net zero targets, and that people and businesses make economic decisions consistent with that, such as the development of greener flying fuels and support for lower carbon forms of transport like rail.”

He added: “In this way, the tax system can be used to send signals to businesses and consumers about the scale of change required. This may be harder to achieve, but it is essential to the challenge of achieving the government’s 10-point plan for a green industrial revolution.”

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