Air Passenger Duty
First meeting of stakeholder forum ahead of consultation.
Scottish Ministers have marked a new milestone towards reform and reduction of Air Passenger Duty (APD) in Scotland.
Deputy First Minister John Swinney and Infrastructure Secretary Keith Brown will this afternoon jointly chair the first meeting of the Scottish APD stakeholder forum – marking the latest stage in fiscal devolution plans
The Smith Commission recommended last year that power to control APD be devolved to Holyrood via the Scotland Bill, which is currently being considered at Westminster.
Speaking during a visit to Edinburgh Airport – Scotland’s busiest – the two ministers also announced the launch of a policy consultation on Scottish APD this autumn.
Mr Swinney said:
“Scotland’s airports are busier than ever and the Scottish Government wants to see that success grow further to the benefit of passengers, business, tourism and our wider economy.
“The APD stakeholder forum brings together interested parties – from those in the aviation industry to environmental groups and tax practitioners – to provide expert input into how a replacement tax could work.
“We want to be consultative and collaborative as we have been with the new fiscal levers already devolved to Scotland. The forum and this autumn’s policy consultation allow us to take the next step and begin the process of designing and developing a Scottish APD to help deliver our objective of sustainable economic growth.
“They are also further examples of the Scottish Government moving ahead with pace and purpose to ensure we are ready to use Scotland’s new additional powers as soon as possible after they have been devolved.”
Mr Brown added:
“With the latest Ernst and Young survey showing Scotland remains the most successful part of the UK outside London in attracting foreign direct investment, Scotland is already an attractive destination for business and inbound tourism and we want to open up Scotland to key and emerging markets to capitalise on the opportunities that exist.
“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 and increase inbound tourism. Our plan to initially cut APD and then abolish it when public finances permit is a fundamental component to improving Scotland’s international connectivity”
Sir John Elvidge, Chairman, Edinburgh Airport, said: “Our report earlier in the year showed very clearly that APD is placing a drag on Scotland’s economic growth, costing jobs and millions of pounds in lost revenue.
“We’ve long supported its devolution and are keen to work with the Scottish Government to ensure that the process is as smooth and as quick as possible. Clarity around the timing of any reduction in APD is vital for route development and we hope that this forum will be able to provide that.”
Sophie Dekkers, easyJet’s UK director, said:
“easyJet has long campaigned for the removal of Air Passenger Duty. We know that its impact is most keenly felt in Scotland where passengers flying domestically pay £13 on both flights.
“Now that powers over APD are being devolved to Scotland, and as Scotland’s biggest airline, we are pleased to be working with the Scottish Government to halve and then abolish the tax.
“When APD is halved passengers in Scotland will quickly feel the benefit, with easyJet and other airlines adding more services to existing destinations and launching flights to new destinations from Scotland."
Paul Simmons, Chief Commercial Officer of flybe, said:
"We believe that the abolition of or the reduction of APD in Scotland will have two key impacts, firstly, some international routes which are currently marginal when we assess them and therefore not flown, are likely to become viable.
“Secondly, there is likely to be a price reduction for the consumer on domestic flying and the real possibility of additional frequencies.
"Both of these will be good for the consumer and the economy."
Kate Sherry, Ryanair's Deputy Director of Route Development, said: "One need only look to Ireland to see the effect scrapping APD has had, with tourist traffic rising by almost 10 per cent since APD was abolished in April 2014 and the VAT received from the additional tourist spend far exceeding the loss of APD.
“We welcome the opportunity to share our views at the Scottish Air Passenger Duty stakeholder forum and support any initiatives to axe this tax.”
An audio clip of Deputy First Minister John Swinney discussing Air Passenger Duty is available at https://audioboom.com/scotgoveconomy
Following the Smith Commission report, which set out a range of recommendations on more powers for Scotland, APD is currently in the process of being devolved to the Scottish Parliament via the new Scotland Bill currently being considered by Westminster. The Scottish Government is looking to take early action to prepare for the devolution of APD, which builds on the principles-based and consultative Scottish approach to taxation which underpinned the successful design and delivery of Land and Buildings Transaction Tax and Scottish Landfill Tax, the first taxes designed by the Scottish Parliament in over 300 years.
- Paragraph 86 of the Smith Commission report, published on 27 November 2014, recommended that “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.”
- Clauses 15 and 16 of the Scotland Bill, as introduced before the UK Parliament by the UK Government on 28 May 2015, relate to the devolution of APD to the Scottish Parliament. Only once the Scotland Bill has been passed by the UK Parliament will the Scottish Parliament be able to legislate for a replacement Scottish tax.
The forum has been established to help design and develop a replacement for APD which better meets the needs of Scotland’s economy. Members of the forum are from a broad range of sectors including airlines, airports, business representatives, tax, accountancy and legal professional bodies and environmental organisations.
The Scottish Government has previously confirmed its intention to reduce APD by 50 per cent within the next Scottish Parliament, with a view to abolishing the tax completely when public finances allow.
- Page 73 of Scotland’s Economic Strategy, published in March 2015, sets out the strategic context for the Scottish Government’s aims regarding devolution of APD to the Scottish Parliament. It sets out an overarching framework for a more competitive and a fairer Scotland and identifies four broad priority areas, one of which is internationalisation, where the Scottish Government’s actions will be targeted to make a difference.