Britain’s coalition government–composed of an exotic combination of Conservatives and Liberal Democrats–is at war with itself in more ways than one. But its recent proposals for a new tax on private aviation are a prime example of this conflict. Outlining plans to extend the UK’s airline passenger duty to business aviation in the annual budget statement on March 22, the Treasury invited interested parties to comment by June 17, with a view to finalizing the tax by the fall. The 50-page document is extremely hard to understand and so, for the benefit of those who don’t have British English as a mother tongue, please let me offer you this translation:
“Since taking office last May, we’ve been delivering sanctimonious lectures to the British people about the need to reduce the country’s budget deficit through shared sacrifice. At the same time, we’ve turned a blind eye to widespread tax avoidance on the part of some of our prominent financial backers. We have also been doing everything possible to feather the nests of the City of London financial community, who have continued to quaff taxpayer subsidized champagne while chuckling at the sight of the working poor being laid off.
“For reasons we can’t fathom, voters have taken exception to this and so, on the advice of some chinless PR twits who went to Eton College with Prime Minister David Cameron, we’ve decided to get tough on the rich and grab back some of their ill-gotten gain. No one in the government has the faintest intention of making the UK’s tax system fairer, so instead we’ve come up with this half-baked plan for what the press are calling the ‘Learjet Levy.’
“We actually have no idea what private aviation is or how it works, but it seems like a soft target. In any case, the airline lobby, which is the only group we found time to consult with before publishing these bogus plans, assures us that it is a terribly fair tax that will induce these tacky millionaires to start performing their patriotic duty by flying with British Airways once more.
“But here’s where the clever bit comes in. The proposals we are outlining for extending airline passenger duty to private aviation are so fiendishly confusing and ill-founded that we will end up having to quietly drop the plan on the grounds that it is unworkable and fiscally inefficient. No matter, because by then we will have enjoyed all the political brownie points that come from appearing to bash the rich while doing nothing to go after huge amounts of tax revenue that currently drains away from the British Isles into offshore bank accounts.”
More seriously, this vacuous PR stunt on the part of David Cameron’s government obscures the legitimate case for commercial users of business aviation to pay a fair equivalent to the duty paid by airline passengers. But unless the government makes a more serious and sincere effort to understand how this could reasonably be applied to private aviation, we are likely to end up with a classic “sledgehammer to crack a nut” scenario in which offshore oil workers taking a 30-minute hop out to a hard shift on a North Sea rig are taxed as if they were close relatives of Prince William jetting in for the Royal wedding on a Global Express from their offshore tax shelter in the Cayman Islands.
The business aviation lobby is now urgently seeking meetings with the UK Treasury to help officials to grasp the realities of the situation. Hopefully, they will focus on arguments aimed at achieving an equitable tax regime, rather than griping about how business jet users should be immune from sharing the burden of Britain’s chronic budget deficit.