New air passenger duty rates

In future passengers on a typical domestic return flight, such as Manchester to London, will pay £12 tax each way.

Passengers flying to the US will pay £60 in tax (a 50 per cent increase), while those flying to the Caribbean will pay £75 (an increase of 87.5 per cent). Travellers to Australia or New Zealand will pay £85 in tax (an increase of 112.5 per cent), meaning a family of four flying Down Under face a tax bill of £340.

Sounds about right. London LAX (round trip) is around 2 tonnes CO2, London New York 1.5 tonnes or so.

Social cost of CO2 is, according to Stern, $85 per tonne.

So the Pigou Tax is at least roughly right, in the correct range.

What many seem to miss though is that this is all we have to do. We internalised the externality and that\’s it. Problem solved. We don\’t have to restrict runways, ration emissions or anything else.

We\’re done.

7 thoughts on “New air passenger duty rates”

  1. As you well know this is the start of the tax hike. Not the end.

    People somewhere still have money to spend on themselves. That needs to be fixed.

  2. Except… ISTR you frothing at the mouth when the Stern Report was published… Something about him “overstating the cost of CO2 by about 400%”..?

    Let’s face it, it’s just another excuse for levying a tax. Pigou doesn’t even get a look-in.

    Tim adds: True, I did. But then rather than try and swim against that particular tide I’m trying to point out that, by the arguments of the Stern Review, we’ve already done what is needed. We don’t need to do more even by the arguments of Stern.

  3. We’ve already done much more than what is needed, especially on flights to and from the US, on which the poor air traveller must pay UK flight tax and US flight tax, as well as international arrival and departure taxes – all of which amounted to some $140 a year ago. I’m sure it’s higher now.

  4. “Being totally naive, how does this tax stomp out footprints of carbon or whatever it’s meant to do?”

    It doesn’t. It ensures that the harm done by a person’s emmissions is less than the benefits that acrue from that person’s emmissions.

  5. …and it only works as long as the costs of CO2 are distributed fairly equally. It doesn’t of course necessarily mean we don’t have to restrict runways, etc, as there are other costs, both private and public, than just the CO2.

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