Mon. May 20th, 2019

Scottish government scraps air tax cut

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Aircraft landing at Glasgow Airport
Aviation bosses have criticised the Scottish government’s u-turn over the promised tax cut

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 completely.

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.”

The 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.

PA
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”.

Government scraps air departure tax cut

The Scottish government has confirmed it will not proceed with proposed reductions to air departure tax (ADT). Ministers had planned a devolved tax which would be 50% lower than the current UK air passenger duty. But the policy has now been ditched in order to help meet the government’s target of reducing greenhouse gas emissions to net-zero by 2045.

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