The impact of passenger taxes

Authors: Seetaram, N., Adedoyin, F. and Ye, S.

Publisher: Taylor & Francis Group


The Air Passenger Duty (APD) is an air transport tax introduced in the United Kingdom in 1994. It was initially supposed that because the air travel industry is undertaxed, the introduction of the APD would be unlikely to create much distortion in the economy. Air travel as an economic activity involves the movement of people from an origin to a destination. This requires the use of resources to provide the infrastructure and other auxiliary services to make the trip possible. International travel necessitates the use of infrastructure and services provided by foreign governments and companies. The exportability of taxes depends on market conditions, such as supply and demand elasticities. The air transport industry is recognized as one of the major contributors to greenhouse gas emissions. A priori, the fact that its effect on international travel is marginal seems to make it not only fairly efficient but also good as a source of income for the government.

Source: Manual