Air Passenger Duty should be abolished

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.

12 thoughts on “Air Passenger Duty should be abolished”

  1. Charging by passenger is wrong anyway. The marginal fuel consumed per extra passnger is infintesimally small. The tax should anyway have been directly on the fuel.

  2. Thus again the problems with Pigovian Taxation; you can’t calculate an accurate figure for the externalities, and even if you could, nobody will set the tax at that level, since there are two distinct and incompatible ideas, to whit

    1) set the tax at a level that compensates for the externalities

    2) set the tax at a level that will discourage people from doing the Nasty Thing.

    It is also, of course, entirely unclear why the State’s general pot of money gets the compensation for the externality anyway. That is, if Ian B flies in an aeroplane, thus causing the Maldives to sink like Atlantis, the State gets more money to build schools and hospitals. This does not make any sense. It is Chewbacca Economics.

  3. Chewbacca Economics

    I’ve heard of the “Chewbacca Defense” but this is news to me. What is it?

    Google gives me a link to a couple of issues being described as this but no definition. And one where the describer, when questioned, merely links to the wikipedia CD article.

  4. Johnny,

    Why limit that to Green taxes? Just because I need the food I steal doesn’t stop it being theft, no matter my moral or legal justification.

  5. “The marginal fuel consumed per extra passnger is infintesimally small.” …. not sure that is correct, anybody know how payload affects fuel economy of an aeroplane? It is true for a car running on the level, but a plane first raises its payload some miles into the air, then needs to generate lift proportionate to the payload when cruising. As far as I know ( I don’t) pilots need to be very aware of the payload to calculate how much fuel they will use. Serf is correct however that the tax should be directed at the fuel not the passenger.

  6. Go with Mr Bonk on the weight/lift calculation.
    I’m therefore proposing the BiS revised APD.

    Henceforth APD will be levied proportional to the mass of the passenger.

    I hope to see a lot more trim little nymphets in skimpy sun-dresses trotting out of arrivals at |Malaga airport & far fewer sweaty hulking beer monsters.

    One must do everything one can for the environment. The polar bears are counting on us.

  7. johnny bonk

    A friend of mine, who is a graduate of Aeronautical Engineering once told us that Aircraft actually use less fuel when full, because of there being an optimal load, which has something to do with Aerodynamics.

    Even if this were not true, a quick calculation seems to suggest that the passengers on a 747 weigh about 1 tenth of the mass of the plane itself.

  8. “APD is a tax, a Pigou Tax, to pay for the emissions damage caused by flying.”

    It can be, it doesn’t mean that it always is.

    Pigou taxation is a concept used by economists rather than politicians. The latter don’t set the tax level based on the externality compensating level and never have; if they did, income tax would be zero.

    Tim adds: Not entirely true. When hte Stern Review came out GB doubled APD to the correct Pigou Tax level given Stern’s calculations.

  9. How about factoring in gains from emissions?

    Warmer planet, higher crop yields, fewer deaths from cold, less energy in winter for heating, fewer icy roads thus less injury and death, more pleasant lives… for example.

    Exactly on what evidence is a net cost from emissions based?

    Presumably the same rationale which would determine there would be a cost if fewer people were called Peter.

  10. Serf is right here. APD is daft; some kind of tax based on the amount of carbon the aeroplane burns would be correct.

    HOWEVER, this is made harder by the fact that e.g. Emirates don’t pay EU carbon taxes, and European airlines have a shit enough time as it is. If I were in charge, before making it compulsory for everyone to venerate Anna McGahan, I’d make APD offsettable against EU carbon tax for anyone who chose to do so.

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