Scottish draft budget confirms intention to cut APD by 50% by the end of the Parliament
In the Draft Scottish Budget announced by Derek Mackay, he confirmed that the Scottish government now has the power to legislate for a tax which will replace Air Passenger Duty (APD) in Scotland. ” …we will introduce a Bill in the first year of the current Parliament to establish the tax which will replace APD in Scotland from 1 April 2018. We remain committed to delivering a 50% reduction in the overall tax burden of APD by the end of this Parliament.” He hopes this will “deliver sustainable growth for the Scottish economy by helping to generate new direct air routes, sustain existing routes and increase inbound tourism.” There is, naturally, no mention of the money lost to Scotland by more outbound tourism. The Scottish Government expects APD will raise £326 million in 2018-19 for them, and £342 million in 2019-20. Edinburgh Airport Watch commented that Mr Mackay did not mention how he will plug the resulting £150 million hole in Scotland’s public finances, or the generous tax incentives already enjoyed by aviation – no duty or VAT payable on aviation fuel, no VAT on purchases of aircraft, or on servicing of aircraft. Airports enjoy a huge tax break in the form of Duty Free Shopping – an enormous cash earner for Airport owners. APD is a fair and progressive tax on an exceptionally lightly taxed industry.
This is what the Draft Scottish Budget, 2017 -18 says on APD:
AIR PASSENGER DUTY
Following the commencement of section 17 of the Scotland Act 2016 on 23 May 2016, the Scottish Parliament now has the power to legislate for a tax which will replace Air Passenger Duty (APD) in Scotland. As set out in the Programme for Government 2016-17, we will introduce a Bill in the first year of the current Parliament to establish the tax which will replace APD in Scotland from 1 April 2018. We remain committed to delivering a 50 per cent reduction in the overall tax burden of APD by the end of this Parliament. This will deliver sustainable growth for the Scottish economy by helping to generate new direct air routes, sustain existing routes and increase inbound tourism.
In the Table 1.01 on Page 3 they anticipate that APD will raise £326 million in 2018-19 and £342 million in 2019 – 20. Air Passenger Duty revenues are based on OBR forecasts of Scottish revenues in 2018-19 and 2019-20
Scottish Government announcement of Air Departure Tax Cut
15.12.2016 (Edinburgh Airport Watch press release)
In his Holyrood budget statement today, Derek Mackay was keen to announce a 50% reduction in the Air Departure Tax – the new name for Air Passenger Duty.
He did not mention how he will plug the resulting £150 million hole in our public finances.
He did not mention the generous tax incentives already enjoyed by aviation – no duty or VAT payable on aviation fuel, no VAT on purchases of aircraft, no VAT on the servicing of aircraft.
Airports enjoy a huge tax break in the form of Duty Free Shopping – an enormous cash earner for Airport owners.
Air Passenger Duty is a fair and progressive tax on an exceptionally lightly taxed industry. The majority of responders to the SG consultation on APD earlier this year agreed, and told the Government that this tax should not be reduced.
Mr Mackay’s announcement cuts across the Scottish Government aspirations for equality – 70% of flights are taken by the wealthiest 15%.
Designed to “improve Scotland’s connectivity”, the proposed 50% tax cut on a short haul flight (up to 2,000 miles – so all of the UK and most of Europe) will be an almost invisible £6.50, so won’t really make a lot of difference to whether people choose to fly or not.
On longer haul flights the tax cut is less than £40, again, a relatively tiny amount within the overall cost of the trip and one that will make little difference to most passengers.
This is a windfall for the wealthy in a time of austerity – and we urge our Government to think again.
A Worsening Tourism Deficit
Scottish Government figures show that our Overseas Tourism Deficit (ie the difference between the amount of revenue foreign visitors bring to Scotland vs the amount that departing Scots take out of our economy) is £1.6 billion.
On average a Scottish Resident spends £600 when they go abroad. This adds up to £1.6 billion, or the cash equivalent of losing over 50,000 jobs in Scotland.
Much needed cash that is being sucked out of our economy. Reducing aviation tax to encourage more flying will simply make the problem worse.
Edinburgh Airport’s planned expansion of routes for 2016/17 is dominated by tourist destinations such as Heraklion, Almeria, Paphos, Kefalonia and Ibiza. The planes will not be full of high spending visitors to Scotland – they will be taking Scots abroad to spend their cash elsewhere, and boosting overseas economies at the expense of our own. A plane to Ibiza with 200 Scots each spending £600 takes £120,000 out of Scotland and creates 6 jobs in Ibiza and loses 6 jobs in Scotland.
80% of all Scotland’s visitors arrive from other parts of the UK and only 9% of them by air – a more sustainable solution for Scotland’s tourism industry would be to encourage better and more affordable surface transport to and from other parts of the UK.
The real winner here will be the shareholders in the aviation industry, much of which is owned offshore.
What cost the failure to meet our legally binding CO2 Emissions targets?
In Scotland, our legally binding carbon emissions targets also include aviation emissions; these targets will soar ever further out of reach if we allow aviation to expand inexorably.
Aviation expansion can only mean more unwanted disturbance for some 300,000 local people and their families – most of whom do not fly regularly.
It will add to the burden on our already stretched surface transport infrastructure, making our air pollution and congestion problems even worse.
What cost the health of people who find themselves living in the increasing noise and pollution shadows of Scotland’s airports?
In our view, this scheme heralds unsubstantiated and unsustainable aspiration where the only true beneficiaries will be those with a vested and/or shareholding interest in the aviation industry.
Edinburgh Airport Watch said:
“We do not support this cut in tax for a vastly polluting form of transport – it simply makes no sense for Scotland on fiscal, economic or environmental grounds.
“While the aviation industry will be delighted at the potential increase in their shareholder incomes, those Scots who suffer the consequences of airport operations on a daily basis will greet this news with great dismay and will not continue to vote for politicians who blindly support a self-promoting industry perpetuating economic myths.
“Our experience of the aviation industry has taught us to treat any promises of job creation with great scepticism.
“The cost of unfettered aviation expansion is poorer air quality, traffic chaos on the roads around airports, more noise misery for neighbours – some of them many miles from the runway – and a worsening of Scotland’s already enormous tourism deficit.
“We urge the Scottish Government to do the right thing for Scotland and rethink this tax cut for the sake of our environment, our health and our economy.
“Choices need to be made – is Scotland to be a low carbon economy that leads the world in tackling climate change, or are we prepared to tolerate unfettered expansion of a vastly polluting industry at enormous cost to Scotland’s health, environment and economy?”
Helena Paul : email@example.com
Website: www.edinburghairportwatch.com and on Twitter and on Facebook
Short briefing from Edinburgh Airport Watch on Air Passenger Duty, and why it makes little sense to cut it
A paper by AEF (the Aviation Environment Federation) sets out reasons why cutting Scottish APD would be unwise
The case for keeping Air Passenger Duty 21st September 2016