Scottish government to press on with plans to scrap air passenger duty
The Scottish consultation on cutting APD ran from 14th March to 2nd June 2016. The Scottish Government wants to press ahead with plans to cut air passenger duty (APD) by 50% by 2012, in stages starting in 2018. They are keen to do this, despite a majority of people who responded to a public consultation raising concerns about the move. The ruling Scottish National Party has long advocated the halving of APD when it takes control of the tax in 2018. But until now it has not had enough votes to push the move through, as all the other main parties had been against any cut. The Brexit vote has led Scottish Conservatives to rethink their stance and they are now set to drop their opposition. It is expected the cut will be unveiled in the 2017/18 budget, the first under new Finance Secretary Derek Mackay. Mr Mackay said he believed APD was a tax that acts as a barrier to Scotland’s ability to secure new direct international routes and maintain existing ones. The SNP also wants to abolish the tax entirely when public finances allow, and hope it will save “families going on holiday hundreds of pounds” and also “bring in an estimated one million passengers to Scotland every year, with airlines poised to introduce new routes.” Edinburgh airport CEO Gordon Dewar told MSPs an APD cut was “even more vital in the wake of the vote to leave the EU.”
SNP to press on with plans to scrap air passenger duty
But he said: “Our plan, taking into account the responses to the consultations, will be to start reducing the overall burden of a new tax in Scotland from April 2018, implement a 50 per cent reduction in full by the end of the current Scottish Parliament, and then abolish the tax entirely when public finances allow. This a fundamental component of our efforts to boost Scotland’s economy.”
Scottish Tories expected to agree to APD reduction
Scottish Tories are reported to be ready to drop their opposition to slashing Air Passenger Duty, paving the way for a 50% cut in the tax north of the border.
The ruling Scottish National Party has long advocated the halving of APD when it takes control of the tax in 2018. The Scottish consultation on cutting APD ran from 14 Mar 2016 to 2 Jun 2016.
But until now it has not had enough votes to push the move through, as all the other main parties had been against any cut.
However, the Sunday Post reports the Brexit vote has led Scottish Conservatives to rethink their stance and the Tories are now set to drop their opposition.
It is expected the cut will be unveiled in the 2017/18 budget, the first under new Finance Secretary Derek Mackay.
He said: “UK APD is one of the most expensive taxes of its kind in the world. It continues to act as a barrier to Scotland’s ability to secure new direct international routes and maintain existing ones.
“Our plan, taking into account the responses to the consultations, will be to start reducing the overall burden of a new tax in Scotland from April 2018, implement a 50% reduction in full by the end of the current Scottish Parliament, and then abolish the tax entirely when public finances allow.”
The Sunday Post adds that, as well as saving families going on holiday hundreds of pounds, a cut will bring in an estimated one million passengers to Scotland every year, with airlines poised to introduce new routes.
Edinburgh Airport chief executive Gordon Dewar told MSPs an APD cut was even more vital in the wake of the vote to leave the EU.
He said: “We have talked a lot about negotiating over months and years to get to an outcome, but we can do one thing that is quick and internationalist, which is just to follow the existing Government policy and halve air passenger duty.
“That would have a low cost but it would reverse what we are hearing about airlines moving investment away from the UK and would, almost overnight, result in significant growth that would benefit the economy and jobs in 2017, never mind the 2020s or 2040s.
“That is what we should do if we want to stand out as being internationalist, open for business and welcoming.”
There is still strong opposition against a cut in APD, with the Greens opposed on environmental grounds and the Labour party wanting to keep the tax and spend the money generated on public services.
Airlines and business leaders have expressed disappointment that the Scottish Government plans to phase in cuts to APD, with the full 50% reduction coming into effect in 2021.
Assessment of proposal to cut APD by 50% in Scotland shows likely overall fall in revenue
An assessment of the Scottish Government’s plans to cut the rate of Air Passenger Duty (APD) shows that the aviation industry’s analysis has not accounted for the impact of a fall in domestic tourism. The 50% cut in APD proposed would have the effect of damaging the Scottish economy and reducing funding for public services. The report “APD Cut: A Flighty Economic Case” challenges claims that reducing APD by 50% will lead to sufficient economic growth to cover the short-fall in revenue from the tax cut. In reality, cheaper tickets will encourage more Scots to take cheap foreign trips. The amount of money they take out of Scotland on these extra trips is likely to be larger than the amount brought in. The inbound tourists with greater spending power than typical domestic tourists are the least likely to be sensitive to airline ticket prices. In a buoyant economy, the increase in outbound trips is likely to exceed the increase in inbound trips. The case for business growth due to an APD cut appears particularly weak as business flights are driven by need and time pressures rather than price. They are know to be price insensitive. There could also be a reduction in domestic tourism by Scottish people, who instead take cheap foreign breaks, so reducing employment in Scottish tourism.
Scottish Green Party calls for Sturgeon to abandon plans to halve APD
The Scottish Green party say that Nicola Sturgeon should abandon her plans to slash air passenger duty (APD). Patrick Harvie, co-convener of the Scottish Green Party, said it was clear that there is no longer a majority at Holyrood in favour of halving APD, which would add to pollution and do nothing to tackle social inequality. The SNP manifesto said it would reduce air passenger duty by 50% over the next parliament (to 2020 or 2021). However, no other party in Scotland supported the move, with even the Scottish Conservatives, traditionally in favour of tax cuts, saying it could not be justified “at a time of constrained fiscal conditions.” The Scottish Green party have suggested models of taxing aviation, such as the Frequent Flyer Levy, which would ensure the cost is shifted onto the minority of mostly wealthy individuals who fly most often. Cutting the rate of APD would have the effect of increasing CO2 emissions from Scottish aviation, by encouraging more flights. A better way to tax air travel (which pays no VAT, and on which there is no fuel duty) would be to recognise the environmental costs of flying. Communities that are badly affected by the noise from flight paths at Edinburgh and Glasgow airports would suffer more noise. The additional noise – especially at night – is known to have adverse health impacts, which have a cost to society.
SNP to launch consultation on plan to cut Scottish air passenger duty by 50%, starting April 2018
The Scottish National Party (SNP) say they will cut Air Passenger Duty (APD) by 50% between April 2018 and 2021, if they win the Holyrood election on 5th May 2016. There is now a public consultation on this proposal. Control of APD is due to be devolved to Holyrood when the Scotland Bill becomes law, so it is no longer administered by the UK government. The Scottish Labour party has said a reduction would most benefit wealthier people, and should not go ahead. The majority of flights are taken by more affluent people, who can afford multiple short breaks as well as long haul holidays. Details of the APD consultation are due to be announced by Finance Secretary John Swinney during a visit to Edinburgh Airport. The 50% cut in APD would start in April 2018, and be done in stages till 2021. The industry would like cutting APD to increase the amount of profitable high spending tourists to Scotland. They hope this would boost jobs and bring economic benefits.The amount of Scottish money taken out of the country on even cheaper flights is not counted, nor the jobs lost as Scots spend their holiday money abroad. Climate campaigners fear the net effect will be higher carbon emissions from Scottish aviation, if the ticket price is cut.
Scottish Government to consult on impact of halving, and then removing, APD
The Scottish government intends to remove Air Passenger Duty (APD) from flights departing from Scottish airports, in the hope of attracting more flights. Scottish ministers hope cutting APD would encourage more direct flights from Scotland and reduce the need for connecting flights via Heathrow and Amsterdam. Air travel is already very under-taxed, paying no VAT and no fuel duty. The Scottish Government says it will halve APD during the Scottish Parliament’s next term, which will run until around 2020. That will mean about £200 million in lost tax to the government, and the Scottish government has to reimburse the UK Treasury. Scottish ministers want APD cut completely “when public finances permit.” There is to be a new policy forum to look into the implications of removing or reducing APD, and a policy consultation this autumn. The forum will include some environmental groups, as well as aviation lobbies. There would be increased CO2 emissions from Scottish aviation if there was a 50% cut in APD, and even more so with no APD. The Scottish government will have to explain “which other sectors of society will pick up the shortfall and at what cost.” More cheap holiday flights for Scottish people is likely to increase the tourism deficit, with more money flowing out than is brought in by in-bound tourists.