Scottish government has decided not to remove APD – tax-free flying is inconsistent with policies to cut CO2 emissions

The Scottish Government has decided to scrap plans to cut Air Passenger Duty (APD). The tax (just £13 for a return flight to anywhere in Europe) is paid by any passenger leaving from a UK airport.  Aviation pays no VAT on tickets and there is no duty of jet fuel. The Scottish government had wanted to reduce the tax by 50% initially, before eventually abolishing it. This has been threatened since 2016. Cutting APD would have the effect of making air tickets a little cheaper, so increasing the number of flights taken – and therefore the CO2 emissions from Scottish airports. Edinburgh airport said the number of extra passengers at Scottish airports could be one million. Finance Secretary Derek Mackay said reducing air departure tax was “no longer compatible” with Scotland’s climate targets, and all sectors have a contribution to make to meeting the challenge of climate change. Cutting the tax would possibly slightly increase the number of visitors flying to Scotland, but the increase in the number of Scottish people flying abroad would be higher. Nicola Sturgeon declared a “climate emergency” in her speech to the SNP conference last month. Cutting the tax would have been entirely inconsistent with that.



Scottish government scraps air tax cut

7th May 2019  (BBC)

Controversial plans to cut the amount of tax paid by passengers flying from Scottish airports have been scrapped after a backlash over the environmental impact.

The Scottish government had wanted to reduce air departure tax by 50% before eventually abolishing it.

But concerns were raised that the move could increase greenhouse gas emissions by increasing the number of flights.

The government has now confirmed that the tax cut will not happen.

Finance Secretary Derek Mackay said reducing air departure tax – which will replace air passenger duty in Scotland – was “no longer compatible” with its climate targets.

Mr Mackay added: “All parts of government and society have a contribution to make to meeting this challenge.

“We continue to support our tourism industry, which is going from strength to strength, and we will work with the sector to develop in a sustainable way.

“We welcome their efforts – and those of the aviation industry – to reduce carbon emissions.”

‘Failed promises’

The announcement was criticised by Gordon Dewar, the chief executive of Edinburgh Airport, who said: “We’ve gone from personal commitments to all-out cancellation in the space of just two weeks, which shows just how reactionary this decision is.

“It does not show leadership and means airports and airlines have been led down a path of failed promises for three years by this Scottish government.

“It also raises questions about continued support for our tourism sector when airlines have already walked away from Scotland due to this failure to deliver.”

The airport had previously published a report which predicted halving the departure tax would create almost 4,000 jobs and add £1bn to the Scottish economy.

The report claimed that failing to cut the tax could see Scotland lose out on nearly a million passengers every year.

Derek Provan, chief executive of AGS Airports which owns and manages Aberdeen International and Glasgow airports, described the Scottish government’s decision as a “huge blow for our airports and for Scotland’s connectivity”.

He added: “Over the course of the past year alone, we have seen the withdrawal by airlines of almost 30 routes from Aberdeen and Glasgow airports because of Air Passenger Duty.”

Image captionThe new devolved air departure tax will replace air passenger duty in Scotland

Air departure tax (ADT) was originally due to be introduced in Scotland last year, but has been hit by a series of delays – with the Scottish government announcing last month that it had been “deferred beyond 2020”.

The government said this was because of legal issues regarding tax exemptions for flights departing Highlands and Islands airports.

The commitment to cutting ADT in half when it is eventually introduced, before abolishing the tax completely in the future, was included in the SNP’s manifesto for the 2016 Holyrood election, with the party arguing it would boost the economy and tourism.

But there was speculation that the policy, which was backed by the Conservatives and the aviation industry, would be ditched after First Minister Nicola Sturgeon declared a “climate emergency” at last month’s SNP conference.

Her government subsequently announced it wanted to reduce greenhouse gas emissions to net-zero by 2045 – five years ahead of the rest of the UK – after receiving fresh advice from an expert panel.

Nicola Sturgeon declared a “climate emergency” in her speech to the SNP conference last month

The u-turn came the day before Labour, the Scottish Greens and Liberal Democrats had been due to call for the tax cut to be scrapped in a Scottish Parliament debate.

They argued that the plan would amount to a £150m tax break for the aviation industry and wealthy business travellers, and that encouraging more flights would increase carbon emissions.

The Scottish Parliament was given powers to charge tax on passengers leaving Scottish airports under the Scotland Act, which came into force in 2016.

Air passenger duty (APD) will continue to be charged on all passenger flights from Scottish airports – apart from those in the Highlands and Islands – until it is replaced by ADT.

The rate of tax varies according to where the passenger is going and the class of travel, and ranges from £13 for the cheapest class of short-haul flights to more than £500 for some long-haul flights.

APD raises about £300m in Scotland and £3bn across the UK every year.

What has the political reaction been?

The Scottish Greens described the Scottish government’s announcement as a “huge u-turn”, which the party said was needed to show that Scotland is serious about meeting its climate change targets.

Scottish Labour said the move was long overdue as a “tax cut that benefits the richest the most and increases emissions was never the right policy”.

But the Conservatives said the government had broken promises to the tourism industry and had “succumbed once again to the environmental extremists in its own nationalist movement”.




See earlier:

Scottish plans to cut APD and introduce Air Departure Tax hit snag with EU state aid rules

Plans to replace Scottish air passenger duty with a discounted alternative have been disrupted by legal issues. The Scottish government wants to replace APD with a new devolved Air Departure Tax (ADT) in Scotland from April next year. MSPs voted for the new tax by 108 votes to 11 in June.  However plans to continue exempting journeys from airports in the Highlands and Islands required EU approval under state aid rules. It is understood that getting this approval could take longer than Brexit. It could cost the Scottish government £320m to maintain the exemption of these flights in the meantime. The Scottish government wants to cut the new tax by 50%, before eventually scrapping it completely. It argues the move will boost the economy by increasing the number of flights to and from the country. To introduce the new tax, it has to be approved by the European Commission, and tough EU rules which ban state aid make it potentially problematic for flights to and from the Highlands and Islands being exempted. Transport & Environment says the state aid issue may never be resolved. If the UK wants to remain in the European Common Aviation Area, it will have to abide by EU rules including those on state aid. ECJ is the final arbitrator in that agreement. And the UK will have no vote in shaping future EU state aid rules.

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MSPs back new Scottish air departure tax (not APD)… but Greens warn SNP not to cut charges

Scottish Ministers will set out the rates and bands for a new tax to replace Air Passenger Duty (APD) in Scotland.  It paves the way for the Scottish Government to fulfil their commitment to halve the tax on departing air passengers, by the end of this Parliament. The Bill to create air departure tax was approved by 108 votes to 11, and it will come into force from April 2018.  Ministers will set out the rates and bands for the new charge in the autumn. These will also have to be approved by MSPs. Though Scottish Labour backed the law, they don’t want the tax to be cut. The Greens and Lib Dems voted against any cut and against the change from APD.  The Scottish Greens said they may snub budget talks with SNP ministers next year unless the SNP rethinks their plan to cut the air tax. The minority SNP administration relied on Green votes to pass this year’s budget.  The Scottish economy cannot afford to lose the income from an air departure tax – public services are already short of funds. It makes even less sense, when the main beneficiaries of cutting the air tax are those rich enough to fly a lot.  Not the poor.  Edinburgh airport claimed it had a record year in 2016 – demonstrating that not deterring passengers. Cutting the tax would mean more incentive to fly, which would cause higher carbon emissions – at a time when we should be cutting them.

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