Government confirms APD devolution to Scotland
The UK government has published a document, “Scotland in the United Kingdom: An enduring settlement”. It sets out the Smith Commission Agreement on devolving powers to Scotland. This states: “The power to charge tax on air passengers leaving Scottish airports will be devolved to the Scottish Parliament. The Scottish Government will be free to make its own arrangements with regard to the design and collection of any replacement tax, including consideration of the environmental impact. ….if such a tax is introduced by the Scottish Parliament to replace Air Passenger Duty (APD), the Scottish Government will reimburse the UK Government for any costs incurred in ‘switching off’ APD in Scotland. … A fair and equitable share of associated administrative costs will be transferred to the Scottish Government. ….The clause includes provision for appointing the day when APD will be switched off in relation to Scotland.” Abta and the Airport Operators Association (AOA) have responded the plans to devolve APD to Scotland by demanding consistency across the UK. They claim this will affect the competitiveness of regional airports in the north of England.
Government confirms APD devolution to Scotland
22 January 2015 (Travel Weekly)
Abta and the Airport Operators Association (AOA) have responded to Government publication of plans to devolve Air Passenger Duty (APD) to Scotland this morning by demanding consistency across the UK.
The Secretary of State for Scotland issued extensive plans for the devolution of powers to the Scottish Parliament today in a document entitled Scotland in the United Kingdom: An Enduring Settlement.
Its publication follows recommendations made by the Smith Commission on devolution set up following Scotland’s referendum on independence last September.
The document includes a draft devolution bill and proposes the next Government “take the clauses forward in a Scotland Bill during the first session of the new Parliament”.
Abta chief executive Mark Tanzer said: “Future reductions in APD planned by the Scottish Government will be good news for passengers flying from Scotland and for Scottish airports and travel businesses.”
But he pointed out: “This will come at a cost to the competitiveness of regional airports in the north of England and to consumers elsewhere in the country who will be paying some of the highest flight taxes in the world.”
Tanzer said: “A cut in one part of the UK is unacceptable and the most competitive rate should be matched for the benefit of the whole of UK plc and all UK consumers.
“Abta is calling for the UK Government to ensure rates of APD are consistent and competitive across the UK.
“We urge the UK Government to take the initiative now, review the impact of this damaging tax and cut it to bring it in line with our neighbours.”
AOA chief executive Darren Caplan noted “the long-stated ambition of the Scottish Government to reduce APD by 50% in the short-term, to be followed by eventual abolition” and said: “The proposals have far-reaching consequences for airports across the UK.
“It cannot be right that one part of the UK is able to levy a substantially reduced rate of APD compared to other areas, disadvantaging not only our airport members but companies and travellers too.
“A cut anywhere should be matched immediately by a cut everywhere.”
Caplan said: “We call upon the main UK political parties to work together to publish a plan, before the general election, setting out how this will be delivered.”
A Liverpool John Lennon airport spokesperson said: “If there are cuts to APD at airports in Scotland, then these need to be matched elsewhere across the UK.
“APD remains a barrier to airline growth in the UK, which the Scottish government recognises and we will continue to campaign for the reduction and abolition of APD for passengers in order to stimulate the market, particularly at airports such as Liverpool where low cost airlines are dominant and these charges can make up a much higher percentage of the air fare.”
An AirportWatch member comments:
The DfT External Advisory Group on 25th March 2015 heard from Gary Cox of the Scottish government how Scotland plans to cut APD to 50% and would like it cut to zero.
However, the Treasury has said that if APD is cut, they will cut the settlement for Scotland by the same amount.
Quite right too! If Scotland wants to introduce a tax dodge for an industry that is already under-taxed and it wants to reduce tax for the well-off who do the vast majority of flying, whey should the English taxpayer pay for the loss in tax revenue, with resulting cuts to public services such as NHS England ?
If Scotland chooses to cut their tax revenue from aviation, they will need to either cur their public services, or find the money from elsewhere. That would not be England’s problem.
“Scotland in the United Kingdom: An enduring settlement” 22.1.2015
3.4 Air Passenger Duty
Paragraph , Smith Commission Agreement, Clause
86. The power to charge tax on air passengers leaving Scottish airports
will be devolved to the Scottish Parliament. The Scottish Government
will be free to make its own arrangements with regard to the design
and collection of any replacement tax, including consideration of the
87. In line with the approach taken in relation to the Scotland Act 2012,
if such a tax is introduced by the Scottish Parliament to replace Air
Passenger Duty (APD), the Scottish Government will reimburse the UK
Government for any costs incurred in ‘switching off’ APD in Scotland.
88. A fair and equitable share of associated administrative costs will be
transferred to the Scottish Government. The Scottish Government’s
block grant will be adjusted in line with the principles set out in
paragraph 95 to accommodate the devolution of APD.
3.4.1 Clause 14 relates to paragraphs 86 to 88 of the Smith Commission Agreement on APD. Through this clause the Scottish Parliament will be given the power to charge a tax on air passengers departing from Scottish airports.
3.4.2 The clause includes provision for appointing the day when APD will be switched off in
relation to Scotland.
3.4.3 Furthermore, coincident with a new tax being introduced by the Scottish Parliament, the existing APD scheme will no longer apply to such passengers.
Air Passenger Duty to be devolved to Scotland, which wants to halve & then scrap it
The Smith Commission, to see how powers including taxation could be devolved to Scotland, says that the Scottish Parliament should be able set income tax rates and bands and Air Passenger Duty should be fully devolved. At present, APD is charged by the Treasury only because air travel is significantly under-taxed, paying no VAT and no fuel duty. There is no logical reason why air travel, which is a luxury product, for discretionary spending, should be exempt from tax. This is particularly the case when the richest sections of society do the most flying, and of the 50% or so who do not fly in any one year, many are less affluent. The Scottish Government wants to halve and then remove APD. For the UK, APD raises about £3 billion per year, and of this about £200 million is raised in Scotland. In theory cutting APD would perhaps increase the number of tourists coming to Scotland. In reality, it is likely that many more Scots travel abroad for their holidays, taking their spending money with them, than foreign tourists flow in. Cutting the tax, and losing the tax revenues from the public finances, may not be wise if it just boosts outward tourism. Airports in the north of England are concerned about losing passengers, who could fly cheaper from Scotland.
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