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Think-tank backs SNP plan to scrap Air Passenger Duty

Published 19/08/2016

The Scottish Government plans to cut and then scrap Air Passenger Duty once it is devolved
The Scottish Government plans to cut and then scrap Air Passenger Duty once it is devolved

Scotland should cut and then scrap air passenger tax or risk remaining out of step with the rest of the EU, according to a think-tank.

Reform Scotland said just four other EU countries have a similar tax.

The think-tank has published a briefing paper reinforcing the Scottish Government's pledge to cut and then scrap Air Passenger Duty (APD) once it is devolved.

Labour claims it is the "wrong move at the wrong time", while the Scottish Greens see it as a "bizarre priority".

Reform Scotland said Scottish residents would save on air fares if the tax was dropped, and endorsed a previous study carried out on behalf of Edinburgh Airport which said revenue lost from halving and scrapping APD could be at least matched by increases from sources such as job growth, productivity growth and tourism expenditure.

The think-tank's chairman, Alan McFarlane, said: "Reform Scotland believes that the Scottish Government should proceed with its plans to cut the tax. Countries across Europe, including Ireland, Belgium, Holland and Denmark, have scrapped their air passenger tax in recent years. By retaining ours, we are out of step with the rest of the EU.

"This is not an ideological issue. It is an obvious and simple economic case. The economic benefits of cutting or scrapping the tax will outweigh the cost of doing so, which will benefit everyone.

"We encourage all political parties at Holyrood to support the cut in APD, in the best interests of our economy and our people. If they fail to do so it will be up to them to justify why they oppose a measure which a wide range of voices argue will help promote economic growth."

He said the plans are backed by parts of the business community and tourism sector.

But Scottish Labour transport spokesman Neil Bibby said: "Across Scotland, our schools, NHS and police force are facing hundreds of millions of pounds of cuts - it shouldn't be the SNP Government's priority to make a business class flight cheaper.

"Cutting APD won't make Scotland fairer or greener. It would be the wrong move at the wrong time. When the SNP Government consulted on this, they were embarrassed to find that most responses agreed with Labour.

"With record passenger numbers at Scottish airports it would be the wrong move to offer a huge tax break to airlines who simply don't need it, and kick off a race to the bottom with other parts of the UK. The SNP need to scrap their plans to cut Air Passenger Duty."

Scottish Greens climate change spokesman Mark Ruskell said: "It's a bizarre priority given the state of public finances for the Scottish Government to want to subsidise the airline industry so frequent flyers can leave Scotland more cheaply.

"The costs to the public purse and the environment are too great for an economic benefit which may be marginal at best and at worst could undermine domestic tourism and rail."

Edinburgh Airport chief executive Gordon Dewar said: "Cutting APD will be a strong demonstration of Scotland's international ambitions and be better value for travellers.

"It will send a powerful signal to the global airline market that Scotland is most definitely open for business, and crucially will lead to the creation of new direct routes."

A Scottish Government spokesman said: "O ur plan to initially cut APD and then abolish it when public finances permit is a fundamental component to improving Scotland's international connectivity.

"UK APD has been the most expensive tax of its kind in Europe and continues to act as a barrier to Scotland's ability to secure new direct international services and maintain existing ones.

"Devolution of APD to the Scottish Parliament will provide the opportunity to put in place new arrangements which better support the Scottish Government's objective to help generate new direct routes - benefiting passengers, businesses and the wider economy."

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