U.K.’s Sunak Cuts Air and Fuel Taxes Days Before COP26
(Bloomberg) -- Just days before the U.K. will host 197 countries for key global climate change talks, Chancellor of the Exchequer Rishi Sunak promised to cut taxes on fuel and flying.
In his budget speech on Wednesday, Sunak said he wanted to encourage more people to take short-haul flights within the U.K., and so would reduce air passenger duty for those journeys to 6.5 pounds ($8.91). That is expected to help 9 million passengers.
The policies are likely to anger environmental campaigners pushing the U.K. to accelerate its transition to net-zero emissions, and threaten to undermine the U.K.’s efforts to show leadership on tackling climate change before the COP26 summit, which begins in Glasgow on Sunday. Sunak said he would host other finance ministers and businesses for a meeting at the event.
“Cutting air passenger duty on domestic flights is an astonishing move that completely flies in the face of the climate emergency. The Chancellor should be making it cheaper for people to travel around the country by train, not carbon-guzzling planes,” said Mike Childs, head of policy at the non-profit Friends of the Earth.
To offset any increased carbon emissions, the Treasury also said it would increase fuel duty for long-haul flights. Those flying up to 2,000 miles (3,200 kilometers) in economy class will pay 13 pounds per flight, rising to 87 pounds for those traveling 2,000 to 5,000 miles. Above 5,000 miles, the duty will be 91 pounds. A Treasury official said that the effect of the changes to the tax would be carbon neutral when the cut to levies for domestic flights is balanced against the rise in ones for long-haul journeys.
“Right now, people pay more for return flights within and between the four nations of the United Kingdom than they do when flying home from abroad,” Sunak said.
The Chancellor also confirmed he would freeze road fuel duty for the 12th year in a row, because fuel prices are at their highest level in eight years.
The policies come a day after the Treasury was criticized by its advisers, the U.K. Climate Change Committee, for failing to have a clear plan on how it would use taxes to pay for the transition. In particular, it said it was unclear how the Treasury would fill a revenue hole left by a switch to electric vehicles.
Sunak also announced that in 2024-25, the U.K. would reinstate its commitment to spend 0.7% of national income on overseas aid, in line with other Group of Seven countries.
He had cut it to 0.5% last year, during the first stages of the pandemic. That led to criticism from poor nations and lawmakers in his own Conservative party that the U.K. was failing to show international leadership on helping the world cut emissions. Earlier this week, rich countries confirmed they would miss their 2020 target to mobilize $100 billion a year for poor countries to tackle climate change.
Nick Dearden, director of the non-profit Global Justice Now, said the budget would undermine trust with developing countries because it “locked in” another three years of overseas aids cuts.
“If the Chancellor’s failure to give the climate more than a passing mention in today’s inward-looking Budget is anything to go by, there will be little trust or faith in the U.K.’s ability to deliver on its pledges at COP26,” he said.
Economic Secretary to the Treasury John Glen pointed out the government also offered 33 billion pounds of investment to encourage green projects like supporting electric-vehicle charging.
“You’ve got to look at everything in the whole,” Glen said in an interview on Bloomberg Television with Francine Lacqua. “There’s a range of pressures. The cost of living pressures mean we have to address those alongside the climate change challenge.”
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