A letter leaked to the Daily Mail shows Chancellor George Osborne has admitted Air Passenger Duty (APD) is not a green tax.
The tax was originally launched in 1994 as a green measure to deter people from flying, but the letter appears to show the government now views it as a nothing more than a cash generator.
Osborne said the levy, which is applied to all passengers leaving the UK, “is fundamentally a revenue raising duty”.
The letter was sent to Olivier Jankovec, director general of the Brussels-based Airports Council International, in August, according to a report by the national newspaper.
Osborne said in the letter that APD raises £2.5 billion per year for the UK government.
He also said he plans to improve the current system by simplifying it on “a revenue neutral basis” and including business jets.
There is mounting pressure from airlines for the government to scrap APD completely, ahead of the entry of aviation into the European Emissions Trading Scheme in 2012.
A recent survey by the Board of Airline Representatives UK (BAR) showed airlines are increasingly worried about their ability to operate effectively from Heathrow in particular.
The organisation surveyed its 86 member airlines, which include British Airways and Virgin Atlantic, about taxes and capacity constraints at the London airport.
The threat of Air Passenger Duty (APD) being imposed alongside the EU Emissions Trading Scheme (EU ETS) next year will have a “critical impact on profitability” said nearly half the airlines (46%), with 42% saying it would have a “significant” impact.