The Effectiveness of UK Air Passenger Duty
Came into effect on 1994, Air Passenger Duty (APD) is an excise duty which is levied on the carriage of chargeable passengers departure from a United Kingdom airport on an aircraft that has chargeable weight of more than ten tonnes or more than twenty seats for passengers (HM Revenue & Customs, 2010a). This essay is to evaluate whether APD is an effective tax by using the theory of ‘canons of Taxation’. Main body
Adam Smith’s the wealth of nations was published in 1776, in this book, he outlined four desirable tax system characteristics. Andy & Lynne (2011) stated that these ‘canons of taxation’ can be re-stated into more modern terms as equity, certainty, convenience and efficiency. and there are also two common additions – simplicity and flexibility which proposed by other writers. In the first place, in respect of equity, HM Revenue & Customs (2010b) claimed that APD is levied by four destination band structure based on geographical distance from London applies. In addition, depend on the class of travel that passenger choose, there are two rates of duty on each level. Because this tax is not regards of passengers’ ability to pay, it is not fair. However, equity has two aspects – horizontal and vertical. To some extent, it is vertical equity that those business and first class travellers who has a greater taxable capacity have to pay more than those passengers who buy economy ticket. In addition, based on the APD band, those passengers who have the same class of trivial and destination has the same tax amount. Secondly, regards of Certainty, HM Revenue & Customs (2010c) announced clear criteria in its websites on passengers who need to pay the tax. However, APD has an increasing trend from 2007 and retrospectively regularly occurred. On this situation, tax payers’ certainty would be significantly decreased (Andy & Lynne, 2011). On 29 November 2011, the Treasury has confirmed the...
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