Think tank backs move to scrap Air Passenger Duty

Scotland’s economy would be boosted by the proposed reduction and ultimate scrapping of the airport tax with benefits far outweighing the loss of tax revenue, according to the Reform Scotland think tank.

Air passenger duty is charged on all passenger flights from UK airports, with the rate of tax varying according to where the passenger is going, and the class of travel, starting at about £13 for short-haul flights to Europe. It brings in around £3bn a year for the UK government but onkly four other EU countries have a similar tax.

The Scottish government wants to use new powers being devolved to Holyrood to reduce APD from Scottish airports by 50% from April 2018 before eventually abolishing the tax altogether.

Reform Scotland said that the loss of revenue from the move could be at least matched by increases in revenue from other sources such as job and productivity growth and tourism expenditure.

It said the proposals had been backed by the business community due to the “positive impact it would have on economic growth”.

And it said the tourism sector believed it would lower costs for Scottish families going on holiday, as well as attracting more visitors to Scotland.

Reform Scotland chairman Alan McFarlane said: “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.”

Edinburgh Airport published a report last year that claimed a 50% reduction in APD would create 3,800 jobs by 2020 and stimulate £200m of economic benefits for Scotland each year.

Mr McFarlane called on all political parties at Holyrood to support the move, which he said was in the best interests of Scotland’s economy and people.

He said: “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.”

A Scottish Government spokesman said: “Our 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.”