Thursday, March 3, 2011
After 2,300 years, the observation of the great Indian political adviser and architect of the Mauryan Empire, Chanakya, still rings true: The enemy of my enemy is my friend. With that point in mind, bitter airline rivals British Airways and Virgin Atlantic, along with airports and tourist sector stakeholders, are showing a united front against the United Kingdom raising its air passenger tax as part of its new budget. See Pilita Clark, Air Industry United to Fight Tax Raises, Fin. Times, Mar. 3, 2011 (available here). Though there appears to be little hope that the U.K. will reduce the tax, passenger airlines would welcome shifting the charges from a per-passenger to a per-aircraft tax.
The U.K. Treasury has defended the air passenger tax as integral to its public financing and deficit reduction plan, though it is questionable whether the airline industry--which produces positive economic effects for airports, travel and tourism, and the countless other industries which rely upon air transport in their day-to-day operations--should be targeted at all. Is the economic good which could come from the U.K. balancing its budget worth the potential cost of hampering the vitality of its airlines? It would be well for the British Government to take pause and recall the words of its great statesman, Sir Winston Churchill: "We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket trying to lift himself up by the handle."