You will recall the two stories HERE and HERE that I have written in the past week on Gordon Brown's ultra vires airport duty hike. Well here's another one.
It appears that the Treasury's failure to anticipate the need for parliamentary legislation for the rise in airport passenger duty has meant that tour operators are facing a £47 million bill for money they cannot claim back from passengers. The industry is expected to pay the duty for passengers who have already booked their flights way in advance.
Regulation 11 of the Package Travel Regs means that tour operators are unable to surcharge passengers who have already booked, unless the amount of the surcharge exceeds 2% of the holiday price, and only then for the amount by which it exceeds 2%. This means that tour operators will have to absorb the full amount of the cost for the bookings already taken. Taking A C Neilsen data, and interpolating this for the entire industry, it is estimated that approximately 4 million holidays have been sold for departures after 1st February. Accordingly, the tour operator industry is being asked to pay a sum that it cannot recover from customers of £47 million, before any sales directly by airlines is taken into account (according to figured calculated by the Federation of Tour Operators). One you include airlines in the figure it could well top £100 million.
Apparently the airlines and tour operators told the Treasury they would consider refusing to pay the money if they couldn't collect it from their passengers, but the Treasury's typically brutal response was to say that if they refused the legislation would be made retrospective anyway.
The tour operators have pointed out that all previous changes to APD have been undertaken with several months notice. This one has been introduced on 7 weeks notice, which also includes Christmas. Their evidence to the Treasury (which I have seen) says:
"The changes need primary legislation, and we need to understand the timescale for introducing that legislation. It will be challenging to make the necessary changes to the law by 1st February, and we would be extremely concerned if any change was effectively retrospective. Time is required to change systems and prices, and technically, it is questionable whether prices appearing in brochures can be changed at all without committing a criminal offence. Trading standards are inconsistent in their interpretation of this rule, but there are certainly some who would regard any price increase from that advertised in a brochure as constituting an offence."
So a measure proposed by Gordon Brown as a "green tax" is nothing of the sort. It's a classic stealth tax on business and one which could send a couple of tour operators over the edge. Well done Gordon!
UPDATE 2 JAN: The Daily Mail has picked up the story on Page 28. Can't find it on their website though...