KEY POINTS:
Passengers flying from Britain to New Zealand will be hit hard by a new tax on air travel.
British finance minister Alistair Darling announced as part of an economic stimulus package on Monday that the current air passenger duty (APD) would become a four-tier system based on distance travelled.
Those flying the farthest and having the biggest environmental impact will pay more, with travellers coming to New Zealand forking out nearly $240 in passenger tax in two years' time.
New Zealand Prime Minister John Key is due to meet his British counterpart Gordon Brown in London overnight and the issue is likely to be raised.
Mr Key has also taken on the tourism portfolio and has identified the need to increase tourist numbers as an important driver of economic growth in New Zealand.
According to the Tourism Ministry, 288,823 people from Britain visited New Zealand in the year ended October.
The tax would also hit New Zealanders and others flying from that country to New Zealand.
The tax was announced as part of the British government's 20 billion pound ($56.3 billion) package to rescue the flagging economy.
Measures also included slashing Value Added Tax on goods and services by 2.5 per cent to 15 per cent.
Mr Darling said while there was cross-party support last year for a reform of APD to a tax per plane in a bid to address carbon emissions, such a move could prove detrimental in the current economic climate.
"This proposal could harm the aviation industry at a time when it is facing huge problems," Mr Darling said.
"So instead I have decided to reform APD into a four-band system ensuring those that travel further and have a larger environmental impact meet that cost."
APD is currently levied at 10 pounds ($28.28) on economy flights within Europe and 40 pounds ($113.12) beyond, with premium seats taxed at double those rates.
Under the changes, charges will be levied across four bands from November 2009.
Band A covers Europe, band B extends to destinations such as Egypt, Bahrain and the United States, band C takes in the Caribbean, and band D includes Australia and New Zealand.
Total APD on a band D flight will be 55 pounds ($155.54) from next November and 85 pounds ($240.38) a year later.
Delivering the budget report, Mr Darling forecast the British economy would shrink in 2009 before recovering in 2010 and said the Labour government was acting now to allow the country to emerge stronger from the downturn.
Britain's economy is teetering on the brink of recession after shrinking in the third quarter of 2008, slammed by the global credit crunch, a slumping property market and chaos on world financial markets.
- NZPA
