A PwC report analysing the UK's Air Passenger Duty (APD) says abolishing the levy would boost the UK economy by £16bn over the next three years and create some 60,000 jobs by 2020.

PwC's research was carried out on behalf of a consortium of UK and Irish airlines (British Airways, Virgin Atlantic, Ryanair and easyJet). Its modelling suggests getting rid of the tax would increase UK GDP by around 0.45% in the first year, with an average 0.3% increase between 2013 and 2015.

Both investments (up by 6%) and export (5% increase) would expand over this period, and PwC says the biggest winners would be UK businesses who could spend more time with key overseas customers. It calculates UK businesses in aggregate currently pay around £500m in APD each year.

While the government would lose £3bn to £4bn each year from the abolition of APD, PwC calculates that this would be offset by receipts from other taxes, primarily from increased business growth and more employment opportunities. It says UK tax revenues could improve by as much as £500m in 2013 and about £250m a year afterwards.

PwC says its analysis shows APD is 'at least as damaging to the economy - and probably more so - than corporation tax and fuel duty'.

Originally introduced in 1994 as a flat rate charge of £5 or £10, APD was rebranded as an environmental levy in 2008 and now costs up to £184 on top of the airline ticket price. PwC found its effects on the environment to be 'secondary' and said 'there are better targeted tools available to reduce airline emissions at much lower cost to the industry and consumers.'

The government has announced plans to increase APD in April 2013 and to bring business jets into the tax regime.