Dominic O’Connell, Deputy Business Editor
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Lord Jones, the outspoken trade minister, has attacked a government plan to raise £2.5 billion through a green tax on flights, claiming that it will damage competitiveness.
His criticisms, made in a private letter last month to Angela Eagle, the Treasury minister, are a further embarrassment for Labour over tax policy.
Last week the government admitted proposed changes to vehicle excise duty would leave 43% of motorists worse off. This followed earlier rows over the abolition of the 10p tax band, changes to capital gains tax and reforms of nondomicile rules, a measure Jones also criticised when it was first mooted.
Jones’s letter to Eagle was sent on June 6, six weeks after the Treasury closed its consultation on the tax, which will replace air passenger duty (APD).
Senior aviation industry sources who have seen it said Jones warned that the tax would damage Britain’s “international competitiveness” and “our ability to attract inward investment.” Both areas are part of his remit as trade and investment minister.
He also drew attention to the possible risk of air freight companies such as Federal Express and DHL moving large-scale operations out of Britain.
The Treasury confirmed that Eagle had received the letter but declined to comment further. A spokeswoman for Jones said: “We do not comment on leaked documents nor on the content of private correspondence between ministers.”
Digby Jones, a former director-general of the Confederation of British Industry, was made a minister by Gordon Brown last July in his “government of all the talents” to appoint experts from outside the Labour party. Jones was made a peer and given the trade promotion portfolio but he has not become a member of the Labour party.
The flight levy, which the Treasury says will help to reduce greenhouse gas emissions, is proposed as a replacement for APD which has been in place for more than a decade. The duty was doubled last year, with passengers paying up to £80 for a one-way trip.
The Treasury wants to change the basis of the duty, moving it from individual passengers to a per-plane basis – including freighters, which are excluded from the scheme. This will raise £2.5 billion a year by 2010, £500m more than APD.
The tax switch, scheduled for November next year, is opposed by many in the aviation industry who say it will penalise flights using British airports and drive away both freight and passenger business.
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I'm behind the tax. It might well affect competitiveness economically in the short term. But if we don't do it - or if we wait too long to do it - then there eventually there will be no aeroplanes, no runways, no City of London and no people...
Jackie, Hereford,
Good to see.
Lets not forget that it is not only the burning of fuel by planes that is contributing to the increasing levels of CO2 but also the travel itself. The clouds created by planes are mirrors for CO2 and reflect and contribute to +50% of the CO2 in our atmosphere. One word, E-commerce
Justin Guerin, Chatham, Canada
I think it makes sense for car tax on larger engined and high emission cars to go up. Aircraft are a different matter as they are key to trade, business relations and good international communications. The proposed flat rate charge needs to be dropped for one that incentivises "greener" aircraft.
Richard Andrew Jefferies, Castaño del Robledo, Spain
A broke political party which is £20 million in debt running a broke country which has a massive £45 billion budget deficit which is desperately taxing everything that moves in the name of `green policies' , to try to compensate for the tax revenue that it has squandered over the past 10 years.
Paul Gooch, Nottingham, England
The solution to everything for Labour is a (whatever) tax.
It is apparently an axiom or universal truth to "Oor Gordy" McBroon that fixing a problem or changing behaviour can only be achieved by extracting money from people.
What a disturbed upbringing he must have had.
Padraig, Perth, Australia
There is nothing green about waste and Labour are the biggest wasters.
steve tea, manchester, cheshire
When Brown doubled APD it was the most bias green tax ever, now he should make a proper job of it and tax all flights from private airfields as well because all flights pollute regardless of their origin, it is stupid to tax cars retrospectively when private jets are taking off all over the country.
Reese, Basildon , Essex
The proposed increase in VED isn't "green"
A "green" tax (to me) is one that's revenue neutral, but encourages people to make a green choice.
The increase in VED will INCREASE the tax take for the government (what a surprise), hence just a tax dressed up as green
clive, Surrey,
If the government was at all green, they'd propose
1) no more runways, for any reason whatsoever
2) total CO2 by flights to having a decreasing ceiling year on year, say 10% - leave it to carriers how to arrange numbers/type as long as the overall effect is less CO2
clive, Surrey,
There is nothing GREEN about these TAXES, The money is not spent to make the Country Green, but to pay for a useless Government who has put our Country into Bankruptcy.
Nemo
Jon Nemo, Llanelli, UK
The govt. is scrabbling around trying to raise tax on anything moves in the name of 'green' policies. The voters of this country now find they are taxed on travel, travel insurance, fuel for the aircraft, airports for the aircraft, security at the airports, all we need now is a tax on the holiday!!
David, Hornchurch Essex, UK
It is always about Tax, they cant come up with anything unless it includes tax.
Which is then spent on more nannies.
The Labour party are now detested by ordinary working people.
I want Harman or Milliband to lead the Labour party at the next election.
Then its Bye Bye Labour
James, Singapore, Singapore
I remember as a child being proud of 'The Flying Scotsman'!
Ronald, Sidcup, UK