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Aviation Industry

Volume 406: debated on Monday 9 June 2003

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To ask the Chancellor of the Exchequer if he will repeal the aviation industry's exemption from fuel duty and VAT. [116952]

The Chicago Convention prohibits the imposition of taxes or charges on fuel kept on board aircraft and consumed on international flights. The UK is also bound by bilateral air service agreements, which impose further restrictions. Although air fares, in common with all public transport fares, are zero-rated for VAT, air travel is subject to a separate tax, air passenger duty, which is charged at rates from £5 to £40 per flight, depending on the country of destination and the class of travel.The 2002 pre-Budget Report announced that the Government would discuss with stakeholders the most effective economic instruments for ensuring that the industry is encouraged to take account of, and where appropriate reduce, its contribution to global warming, local air and noise pollution.These discussions will be used to inform the Government's views, which will be set out in its Air Transport White Paper later this year.