Tour firms lose 'green' tax case

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A legal challenge to the way the government's "green" tax on air travel was introduced has been thrown out by the High Court.

The Federation of Tour Operators and two of its members said they had been hit with a £50m bill that could not be passed on to customers.

The judge had some sympathy with the firms who argued existing bookings should have been exempt from the tax.

But he said that there was no legal basis to intervene.

Judge Stanley Burnton said that Air Passenger Duty was "a proportional measure" to cut environmental damage from aircraft emissions "aimed at reducing air travel below the level at which it would otherwise be, and thereby reducing the damage caused to the environment by such travel".

Insufficient notice

The federation, which brought the case with Tui and Kuoni Travel, had wanted a judicial review into the introduction of the tax.

It said that holiday companies had been left to foot the bill from existing bookings - which package travel regulations prevented them from passing on to passengers

Tour operators believed that they had been given insufficient notice of the tax rise and that the Treasury should have granted them an exemption for existing bookings.

Its (the Treasury's) decision... effectively imposed a major and wholly unexpected financial penalty for the sector to absorb Federation of Tour Operators

They also argued that the tax which has doubled the amount of passenger duty paid when taking flights from the UK was "greenwash" which had little environmental benefit.

The increase was announced by the then Chancellor Gordon Brown last December. He said airlines should pay more for damaging the environment.

Hundreds of thousands of people have been asked to pay extra duty, despite buying tickets before the announcement.

While the new tax is only payable on flights from UK airports, passengers face paying twice on internal flights.

The federation, which was denied permission to appeal, said it was disappointed by the ruling.

"Its decision to ignore the industry's calls for this exemption effectively imposed a major and wholly unexpected financial penalty for the sector to absorb - one which disadvantages it against its many travel and airline industry competitors."

It added that "the tax increase on bookings already made shows that this element of the tax could in no way contribute to the Treasury's stated environmental aims".

A Treasury spokesman welcomed the ruling, saying that Air Passenger Duty had a valuable role to play in the fight against climate change, and that the changes announced were "the right thing to do" and "legally robust".