The tax was originally billed as an environmental tax when it was launched in 1994. But the government has never confirmed whether the money raised, around £3 billion per year, has been spent on “green” projects.
When pressed by TTG at the Abta Travel Matters conference, Sugg admitted: “It goes directly to the Treasury, the funds raised from APD, and then contributes to the spending the Treasury does. It’s not specifically allocated. It does contribute to the wider tax revenue of the government and any reduction would obviously have to be made up for elsewhere.”
Sugg said she was “well aware of the opinion” of the travel industry on APD and wanted to hear the sector’s views.
The industry has campaigned against APD for more than a decade, with lobbying organisation A Fair Tax on Flying calling for a 50% cut in the tax “to make Britain competitive”.
The Treasury told TTG revenue from APD goes into the “consolidated fund”, the government’s main bank account.
“With no tax on aviation fuel or VAT on international or domestic flights, APD ensures the aviation sector plays its part in contributing towards the cost of public services – raising over £3 billion a year,” a Treasury spokesperson said.