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Northern Ireland 'should be empowered to cut duty on air travel'

By Margaret Canning

Published 03/06/2016

Economist: Dr Esmond Birnie
Economist: Dr Esmond Birnie

There is a strong argument for allowing Northern Ireland power over air passenger duty (APD), a high profile economist has said.

PwC Northern Ireland chief economist Dr Esmond Birnie spoke out as new Finance Minister Mairtin O'Mueilloir said he would carry out a review into obtaining power over APD - which currently amounts to a £13 surcharge on short-haul flights out of NI.

Stormont has already axed APD on long-haul flights.

Dr Birnie said: "APD is a tax where strong consideration should be given to going beyond the existing part devolution.

"This is because there is a considerable body of evidence (both for the UK and internationally) that cuts in APD could stimulate private sector output and employment growth - hence delivering some so-called 're-balancing'."

And he said the devolution and abolition of APD would also result in lower costs to consumers from cheaper holidays.

But he added that the measure would have to be paid for.

"There are considerations as to the impact on the Northern Ireland Block grant from the Treasury - analogous to, but on a smaller scale from, the corporation tax cut proposal for 2018 - which need to be carefully weighed."

Last year, a report by the NI Centre for Economic Policy at Ulster University suggested that although removing the £26 charge from return flights could generate over 500,000 more airline passengers annually, it could ultimately come at a cost of over £7m per year to the block grant.

A separate report by Mott MacDonald said that a 50% reduction in APD "might support around 3,800 additional jobs and £200m per annum in GVA (gross value added) by 2020".

The Department of Finance and Personnel (DFP) sided with the first report.

Belfast Telegraph

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