A plan to halve airport passenger duty (APD) is coming under renewed scrutiny as a public consultation on the measure comes to a close.
Climate campaigners have called on the Scottish government to rethink the cut, saying it is “inconsistent with Scotland’s climate commitments”.
But airlines and Scottish airports have said it would boost tourism, investment and business activity in Scotland. [It will certainly boost outward bound tourists, with the most likely outcome more Scots taking cheap leisure flights,spending their money abroad and not in Scotland. AW note]
SNP ministers have said they will cut the duty by 50% between 2018 and 2021.
The consultation on the proposed cut will end on Friday.
Air passenger duty rates for the UK currently range between £13 and £146 depending on the distance of the flight and the class of seat. [It is £13 for any return flight anywhere in Europe, economy class. It is just £73 on any other return flight. The higher band was abolished by George Osborne from 1st April 2015].
Ministers hope that reducing APD will increase the number of direct flights to and from Scotland.
But Scottish Labour leader Kezia Dugdale has called on the Scottish government to scrap its plans.
Formally replying to the consultation, Ms Dugdale said it was the “wrong priority” at a time of public spending cuts and environmental challenges.
“Cutting APD would be a regressive step that would increase carbon emissions. It won’t make Scotland fairer or greener,” she said.
“Faced with the choice between carrying on with the cuts to schools and local services or using the powers of our Scottish parliament, the SNP must use the powers to stop the cuts.”
Environmental campaigners have also urged the Scottish government to “rethink” its plans.
The Stop Climate Chaos Scotland (SCCS) coalition said it would result in an extra 60,000 tonnes of greenhouses gases reaching the atmosphere every year.
Tom Ballantine, the coalition’s chairman, added: “The £300m raised each year from APD is the equivalent of employing 11,507 nurses or installing solar panels on 60,000 homes, which is almost every home in Dundee.
“At a time of austerity cuts and whilst funding is urgently needed to support Scotland’s low carbon future, this money give-away for already under-taxed airlines is the last thing Scotland can afford.”
But the Scottish government has defended the cut, saying the UK’s APD was one of the most expensive taxes of its kind in the world and that it was committed to tackling climate change.
Control of the tax is due to be devolved to Holyrood when the relevant part of the Scotland Bill comes into effect in April 2017.
A Scottish government spokesperson added: “We recognise that there are important environmental issues to consider.
“That is why we are working with environmental groups such as Stop Climate Chaos Scotland and Scottish Environment Link on our stakeholder forum and currently consulting on a strategic environmental assessment as part of developing our proposals.”
Both Edinburgh and Glasgow airports are supporting the move. [Now, there’s a surprise! Edinburgh airport is owned entirely by foreign wealth funds, through GIP, intend on maximum profits. It has no UK owners at all].
Edinburgh Airport’s chief executive, Gordon Dewar, said the reduction would bring in an extra 18 million passengers to Scotland and generate 10,000 new jobs in tourism.
Amanda McMillan, chief executive of AGS Airports Limited which owns both Aberdeen and Glasgow airports, said APD currently put Scotland’s airports at a “severe disadvantage” given its position on the edge of Europe.
The largest airline operating in Scotland, Easyjet, has also welcomed the 50% cut.
Sophie Dekkers, the company’s UK director, said: “Cutting the tax will boost tourism, investment and business activity in Scotland.
“Research by PwC has shown that abolishing APD would have a positive effect on jobs and growth, as well as public finances in the longer term.”
Economic and environmental concerns about Scottish Government’s Air Passenger Duty plans
AEF has responded to a consultation on the Scottish Government’s plans to reduce and replace Air Passenger Duty (APD), challenging the potential economic benefits and highlighting the environmental impacts.
APD is being devolved to the Scottish Government under the Scotland Act 2016. The SNP has committed to halving and eventually abolishing APD, as referenced in the Programme for Government 2015-16 and Draft Budget 2016-17. Towards the end of the last Scottish Parliament, the SNP Government acted on this commitment by consulting on its proposal to replace APD, reduce it by half and abolish it “when resources allow”.
However, the likelihood of these changes occurring was hampered by the recent Scottish elections when the SNP failed to win an overall majority. This leaves the Government relying on votes from other parties to pass new legislation and all other parties had manifesto commitments opposed to reducing or abolishing APD.
AEF believes that in the absence of other measures, APD goes some way towards making up the shortfall for an undertaxed industry, with zero VAT or fuel duty being charged on an airline ticket. This is a major anomaly according to the World Bank and International Monetary Fund, and particularly important considering that the vast majority of flights are for leisure purposes.
The consultation focused on two areas: its proposals for a replacement levy to APD and a scoping study of the environmental impact assessment of the proposed changes that would need to be undertaken. Download AEF’s responses below.
How likely are the economic benefits?
The premise of the SNP’s commitment to reducing and abolishing APD is that it would improve connectivity and generate economic growth. AEF’s response argues, however, that there are no guarantees that either of those aims would materialise. Our response cites evidence from a report commissioned by the Northern Ireland Department of Enterprise, Trade and Investment which concluded reductions to APD would primarily benefit outbound holidaymakers, and we refer to a CE Delft report which questioned the evidence base for the direction of causation between airport activity and economic growth. The Scottish Government should independently assess whether reducing APD will contributing to its economic objectives.
What about the environmental costs?
While APD is not explicitly designed for environmental purposes, if cutting the tax increases aviation demand this will come with environmental costs, as we highlight in our response. For example, under the Scottish Government’s proposals, halving APD would increase aviation emissions by 34-60 KtCO2e per year according to an initial assessment by Transport Scotland, the national transport agency for Scotland. They predict that reducing APD on departures from Scotland is likely to lead to an increase in demand for short haul leisure seats in particular. If predictions that some passengers would switch from northern England airports materialise, this would further increase passenger demand and associated emissions. This conflicts with the SNP’s commitments to increase the Scottish Government’s ambition on climate change.
Our response to the Scottish Government outlines the case for taking domestic as well as international action for addressing emissions from aviation, noting that under the Climate Change Scotland Act all sectors are expected to be contributing to a ‘high ambition pathway’, with no slack available for any sector to increase its emissions. It also highlights the need for aviation policies to contribute to reducing the health burden of aircraft noise, in line with WHO recommendations, and meeting legal limits on air quality – issues that could be exacerbated by an APD cut designed to increase air traffic. All aviation policies should contribute to national and international environmental goals.
AEF response to Scottish Government consultation on APD May 2016. The consultation document is available here.
AEF response to Scottish Government APD SEA consultation May 2016. The consultation document ‘A Scottish replacement to APD: Strategic Environmental Assessment Screening and Scoping Report’ can be downloaded here.
SNP facing pressure to axe plans to cut air passenger duty
16 May 2016 (Scotsman)
The Scottish Government will be forced to ditch its flagship plans to cut airline taxes by half, Holyrood opposition leaders have warned.
Holyrood’s newly strengthened opposition parties have the numbers to out-vote the government and have signalled the SNP will not have things all their own way in the coming parliament.
The SNP wants to cut air passenger duty (APD) by half to encourage more flight routes at Scottish airports and boost tourism. John Swinney launched a consultation in March on the government’s plan which would see the levy reduced by 50 per cent by the end of this Parliament with the long-term goal of scrapping it completely.
Greens co-leader Patrick Harvie said yesterday that ministers should come up with alternative to the plan or end up with nothing.
He said: “They clearly don’t have a majority for their proposition on Air Passenger Duty. If the SNP is open to talking about alternatives then I think they’ve got the opportunity to replace air passenger duty with something better. If they just want to dig in their heels and say our way or nothing, then nothing is likely to happen.”
The SNP minority government is already facing the prospect of the Offensive Behaviour at Football Act being repealed. All opposition parties are against some aspects of the much criticised laws to tackle sectarian singing at football and the Tories unveiled legislation at the weekend to take it off the statute book.
The power to cut APD is part of the new controls which have been devolved to the Scottish Parliament after the independence referendum. The planned cut has the support of the airline industry and business leaders who believe it is set at a punitive level in the UK and is holding back growth. But opponents fear it will simply drive up greenhouse gas emissions as the Scottish Government fails to meet its “world leading” targets on climate change.
Mr Harvie urged the SNP to find an alternative policy that can command a Parliamentary majority.
Both Labour and the Conservatives have manifesto commitments to oppose the SNP APD proposals.
The Liberal Democrats have been against the proposal since it emerged three years ago.
But the Scottish Government has branded the APD rate in the UK as one of the “one of the most expensive taxes of its kind in the world.”
A SNP spokesman for the SNP said: “We are committed to reducing APD by 50 per cent over the next parliament, delivering cheaper flights for people in Scotland, supporting our tourism industry, creating jobs – and bringing more direct international flights.”