APD is a tax, a Pigou Tax, to pay for the emissions damage caused by flying.
All, right, all right, leave aside whether you believe any of that or not. Assume you do.
So, ew only want to have one Pigou Tax on an activity, we want to tax things at the optimal level, not the maximum level possible. We\’re trying to put into the price system the things which the price system doesn\’t consider: the costs of those emissions.
The emissions trading scheme means airlines will have to surrender a permit for every tonne of carbon dioxide they emit, which is expected to raise the cost of flying for millions of passengers.
Bigger airlines, such as easyJet and British Airways, have long been preparing for huge bills from the emissions trading scheme.
They will get a large number of free allowances in the first few years of the scheme to protect their businesses from becoming uneconomic.
Airlines now have to have carbon permits. This is the alternative method of getting emissions prices into market prices.
But we only want one of the two: thus, if we\’re to have carbon permits for flights then APD should be abolished.
Won\’t happen, I know, but it ought to.