Taxing times

The Liberal Democrat's proposals to add another £10 fuel surcharge to internal flights should be grounded.


Chris Huhne, the Liberal Democrat spokesperson for the environment, says that this would raise £12bn over 5 years which would be reinvested into alternative, and more fuel efficient forms of transport - rail for example. Their argument is that by raising tax, internal flights would be curbed, which is good for the environment.

However, this sort of tax measure puts the cart before the horse.

Introducing this sort of blunt instrument will not, as the Lib Dems suggest, have a material impact upon the amount of people taking internal flights. Flying between London and Edinburgh, say, is not a strict substitute with taking the train - there are many advantages to taking the plane, of which one is the cost.

But in order to substitute away from air travel into rail travel, the quality of service, speed and reliability need to be increased in advance of the increase in tax.

Otherwise the introduction of the tax will in all likelihood be absorbed by the travelling public and will amount to little more than a revenue raising instrument, thereby failing as a serious Pigouvian tax.