CLAUSE 19 : AIR PASSENGER DUTY : CHANGES IN EXEMPTION FROM DUTY
1. Clause 19 abolishes the domestic return leg exemption from air passenger duty. This is necessary for the UK to comply with its EU Treaty obligations. It also introduces an exemption from air passenger duty for flights departing from airports in those regions with a population density not more than 12.5 persons per square kilometre which are designated by Treasury Order. This is in recognition of the reliance on air transport by people in remote regions. These changes will come into effect from 1 April 2001.
DETAILS OF THE CLAUSE
2. Subsection (1) provides for the amendment of section 31 of the Finance Act 1994.
3. Subsection (2) removes subsections (1) and (2) of section 31 of the Finance Act 1994 which provide for the exemption from air passenger duty of the return leg of a flight within the UK except where the outward or return journey involves two or more flights.
4. Subsection (3) provides for the insertion of new subsections (4B), (4C) and (4D). Subsection (4B) exempts from duty the carriage of a passenger departing from, or having an agreement to depart from, an airport in a region of the UK designated by order. Subsection (4C) provides that an order made under subsection (4B) may be made in respect of any region which has a population density of not more than 12.5 persons per square kilometre. Subsection (4D) provides that the references in subsections (4B) and (4C) to a region will be a region as determined by the Treasury.
5. Subsection (4) removes subsection (6) of section 31 which allows the domestic return leg exemption, provided for in section 31 (1) of the Finance Act 1994, to apply to flights which had their first legs departing from an airport in the Isle of Man.
6. Subsection (5) provides for the consequential amendment of section 43 (2) and the omission of section 43 (3) of the Finance Act 1994.
7. Subsection 6 provides for the section to apply to the carriage of a passenger on an aircraft w hich begins on or after 1 April 2001.
8. Repeal schedule 39 Pt. 1 (4) provides for the necessary repeals in the Finance Act 1994.
9. The Government has announced that from 1 April 2001 it will abolish the exemption from air passenger duty for the return leg of a domestic journey. At present the return leg of an air journey within the UK is exempted from duty. This exemption is being removed because it is incompatible with our EU Treaty obligations.
10. An exemption for flights from the Scottish Highlands and Islands from 1 April 2001 has also been announced by the Government. This exemption has been introduced in recognition of the remoteness of the region and the reliance on air transport. The Scottish Highlands and Islands is the only area that meets the criteria provided by this new exemption.