When polymerase chain reaction (PCR) tests became mandatory for international arrivals back in January, aviation leaders hoped the move – in conjunction with the global vaccination programme – would help to restore confidence in foreign travel. But far from ushering in a new era of post-pandemic travel, rip-off PCR tests are deterring thousands of families from jetting off this summer – thanks in part to a punitive tax that prices out all but the affluent.
For a recent trip to an amber list country, I had to purchase a ‘fit to fly’ testing kit costing £150, and some providers are charging as much as £575 for a single test. That is more expensive than most economy class flights to continental Europe. Indeed, British residents are having to pay twice as much for PCR tests than the majority of those living in Europe, singling us out as a nation where only the rich can afford to fly. You begin to wonder why these gold-standard tests are so exorbitant when they are significantly cheaper elsewhere and provided free by the Government in various circumstances.
Clinicians argue that high fares are due to staffing and laboratory fees. Others, including Health Secretary Sajid Javid, say it is the fault of rogue providers for exploiting their customers and not being transparent. The truth probably lies somewhere between the two, but we shouldn’t ignore another factor in the high price of tests – VAT
As ever with consumption taxes, it’s the worst off who suffer the most. A recent survey by Opinium suggested that only 5% of the poorest Britons have left the country over the last few months. However another poll, this time by Survation, showed 40% of respondents saying they would consider booking a trip if VAT was removed.
Decent healthcare firms working flat out to deliver swift and reliable swab results also feel they are being unfairly accused of profiteering when a sizeable chunk of the cost is levied by the Treasury. Lyn Blyth, Director of Operations at Hughes Healthcare, tells me the Exchequer ‘is taking the opportunity to profit off this necessity’ and that the tax is acting as a barrier in ‘keeping international travel accessible’.
For months, businesses have been pleading with policymakers to withdraw the levy. Commercial airliners like Tui, who have been outsourcing tests, said they have had to subsidise testing costs to keep their package deals attractive. It is clear that this stealth tax is not just hurting holidaymakers. It is inflicting damage to the grounded tourism sector that depends on frequent flyers for its very survival.
If the Prime Minister really believes in a more ‘user-friendly’ travel system that gets ‘the industry moving again’, his government should take action and scrap VAT on PCR tests. It would mean a saving of between £40 and £240 for a family of four, which would potentially cover the entire cost of their return flights from the continent.
The positive knock-on effects could also be considerable. Indeed, researchers at the University of Hull found that radically slashing VAT on tests could boost the economy by nearly £5 billion, while the tax take from holiday spending would increase by £140 million to £2 billion.
It was encouraging to see the Government this week cut the cost of NHS tests. As we approach the latter end of the summer season, it is time for our leaders to take financial responsibility and waive VAT on all private Covid tests. By doing so, it would send a strong message of support: not only to those working in aviation and tourism desperate to see passengers take their seats, but to the hardworking men and women who, this year more than ever, deserve some time in the sun.
Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.
CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.