Holyrood passes new air passenger tax cut law

The Air Departure Tax (Scotland) Bill sets the structure of the new tax and how it will be collected and managed by Revenue Scotland.

MSPs voted to create a legal framework for the new tax at Holyrood yesterday and, although they did not set a rate, the SNP plans a 50 per cent cut.

Detail on tax bands and tax rate amounts will be set out in secondary legislation in the autumn, the SNP said, as part of the Scottish Government’s budget process and alongside other devolved taxes.

Finance Secretary Derek Mackay said: “The Scottish Government’s plans for ADT are a key part of our economic strategy for sustainable growth - in particular boosting trade, investment, influence and networks.

“Scotland is already an attractive destination for business and inbound tourism, but it is important, particularly given the economic threat posed by Brexit, that we continue to be open to key and emerging markets in order to further capitalise on the opportunities that exist.

“Our airports are competing on a world stage to secure new routes and capacity. Reducing the tax burden helps ensure a more level playing field with many other European airports competing to secure the same airlines and similar routes. New routes will enhance business connectivity and tourism as well as providing new jobs.

“The establishment of ADT is another important milestone on the journey to enhance Scotland’s fiscal powers, and another example of this Government continuing to move ahead with pace and purpose in order to ensure we are ready to begin using Scotland’s new powers once they are devolved to the Scottish Parliament.”

Conservative MSP Liam Kerr backed what he called a “completely logical” move.

He said: “Many in the north-east have little option but to fly if they need to make journeys to London, for example.

“If we accept the argument those who are wealthier fly, aren’t they exactly the kind of people we want to attract to Scotland to stimulate growth?”

Moira Kelly, chair of the Chartered Institute of Taxation’s Scottish Technical Committee, said: “Today’s vote marks another important milestone in Scotland’s tax devolution journey, creating the framework that will enable Air Departure Tax (ADT) to be wholly administered and collected north of the border.

“However, we remain none the wiser as to how the Scottish Government’s stated policy objectives for the bill – supporting improved connectivity and sustainable economic growth – will be reflected in the rates and bands of the new tax when it takes effect from April next year.

“By failing to include the detail of who will pay what in primary legislation and by deferring this detail until later in the year, the Scottish Government has missed an opportunity to provide those impacted by the tax – passengers, airlines and airports – with advanced notice of what they will pay in the future and how this compares with the outgoing regime it has been designed to replace.

Green MSP Andy Wightman, meanwhile condemned a tax cut he said would put £47.3million into the pockets of businesses in the first year.

He added: “Greens cannot support legislation with such weak environmental, economic and social criteria.”

Scottish Labour transport spokesperson Neil Bibby MSP said his party supported a tax, but not a tax cut.