Holidaymakers clobbered with record £4.6billion flying taxes under Labour, official figures show, with families shelling out millions of pounds more to go abroad after levy hikes

Chancellor John Healey faces mounting pressure to address concerns over taxation policies, particularly regarding middle-income earners and holidaymakers, following reports from the Resolution Foundation and HMRC data revealing significant tax burdens. The thinktank warned that funding Labour’s pledge to allocate 3.5% of GDP to defence by 2035 would require raising taxes on middle earners, while HMRC figures showed a record £4.6 billion collected in Air Passenger Duty (APD) last year, marking a 12% increase from the prior year. Healey, who previously resigned from Keir Starmer’s government in June over insufficient defence funding, now holds a key position in No 11 Downing Street. In his new role, he plans to delay announcing a detailed plan for meeting the 3.5% GDP target until next year’s spending review. However, the Resolution Foundation’s report, titled Thin End of the Wedge, suggests that achieving this goal will necessitate increasing the tax burden on average workers. According to the report, despite substantial tax increases totaling £70 billion annually since Labour took office in 2024, the UK still maintains one of the lowest tax wedges, defined as taxes on earnings minus benefits, for average earners compared to its international counterparts. The foundation’s chief economist, James Smith, noted that the UK’s tax wedge for a single earner on average pay stands at 32.4%, which is below the OECD and G7 averages. Smith emphasized that countries with higher public spending typically rely more heavily on contributions from average workers rather than business or wealth taxes. He stated that no other OECD-rich nation combines a larger state with a lower burden on average workers, suggesting that politicians promising both are unrealistic. The report highlights that the tax wedge on a worker earning the median salary of £33,000 remains historically low, even below levels seen before the 2008 global financial crisis. This is partly due to the constraints placed on former Chancellor Rachel Reeves, whose tax-raising measures focused on employer national insurance contributions and fiscal drag, avoiding direct increases in income tax, VAT, or employee national insurance rates as per Labour’s pre-election promises. Burnham’s government is currently under pressure to manage household expenses related to rising energy costs during the upcoming winter and to enhance support for unemployed youth entering the workforce. Healey’s first budget, scheduled for 28 October, requires finding approximately £1.4 billion annually over the next three years to fund Starmer’s defense investment plan, which Healey previously criticized as inadequate. Separately, HMRC data revealed that holidaymakers faced a record £4.6 billion in APD last year, with a notable increase attributed to Labour’s decision to hike the levy by 15%. This increase affected families traveling in economy class, with some facing over £400 in additional costs for a trip to certain destinations. The first quarter of the current financial year saw £1.6 billion collected in APD, surpassing the previous year’s figure by £66 million. Tory transport spokesperson Richard Holden criticized Labour’s approach, stating that the party consistently seeks ways to raise taxes on working individuals to fund benefit payouts. He urged Healey to consider freezing APD in his upcoming budget to alleviate financial strain on families planning holidays. Former British Airways CEO Willie Walsh described APD as the highest air travel tax globally, noting that the UK collects 8.9% of all global aviation tax revenue despite accounting for only 3% of the global air passenger market. Industry leaders have expressed concern over the impact of these tax hikes on the tourism sector, with Mark Tanzer of ABTA urging the Chancellor to provide relief to holidaymakers and avoid further increases in departure taxes. As Healey prepares to deliver his first budget, the focus will remain on balancing economic priorities while addressing public concerns over taxation and affordability.