US Embassy Criticises UK Plane Tax

The US embassy in London has criticised a government plan to tax airlines on each plane rather than each passenger, from November next year. In a letter leaked to the Daily Telegraph the embassy disputes the Treasury case that the change is aimed at lowering CO2 emissions.

It says the new tax appears to be just a way of generating extra revenue, and could breach international laws. The Treasury denies it is proposing any tax which could be considered illegal. The embassy letter expresses the "deep concern" of the US government with the Treasury's plans. It lists a number of international agreements that it says would be breached by the new tax. The Americans also say there's no evidence of any environmental benefit, as the extra millions raised would simply go into the government's coffers.

The Treasury's new tax will vary, depending on the size of the aircraft and how far it is travelling. Airlines estimate that under the proposed tax change, the tax payable on a flight from the UK to the US could more than double to £100 per person. The Government says the new tax will help cut emissions, by discouraging airlines to fly planes that are half empty.

But critics say that the tax will not affect budget airlines - as they normally fill their planes to capacity. There are also fears that airlines will avoid British airports - choosing instead to operate from other European airports where they will not be subject to the tax.