Trade cautiously welcomes proposal to devolve Scottish APD

APD has continued to rise, but would Scotland abolish it?
APD has continued to rise, but would Scotland abolish it?

The travel industry has given a mixed reaction to the news that Scotland could gain control over some of its taxes, which would include Air Passenger Duty (APD).

The Smith Commission has recommended that the Scottish Parliament have full control of income tax rates and bands and the report is also expected to say APD should fall under the regional parliament.

The commission was set up by the UK government to look at devolving powers to Scotland following the referendum earlier this year.

Both ABTA and the Board of Airline Representatives (BAR UK) said the move could further put the rest of the UK at a competitive disadvantage if the Scottish government decides to scrap APD.

BAR UK chief executive Dale Keller said: “The Scottish government has already indicated it would slash or scrap the world’s highest air passenger tax to stimulate the local economy. The right time is now for the whole of the UK to share equally in the benefits a phasing out of APD would deliver.”

Mark Tanzer, CEO of ABTA said: “Today’s announcement by the Smith Commission that the Scottish Parliament should have full power over Air Passenger Duty could have a significant impact across the whole of the UK. Any inconsistencies between what a passenger pays flying from Scotland compared to elsewhere in the UK could create an uncompetitive and damaging situation for travel businesses.

Tanzer added: “ABTA has welcomed that the Scottish government has recognised the damaging impact this tax is having on jobs and growth as well as on consumers. In light of today’s announcement, ABTA is urging the UK government to review the level and impact of this damaging tax with a view to reducing it across the whole country.”

Meanwhile Flybe welcomed the news and said scrapping APD would allow new routes to open up for Scotland.

“Flybe welcomes the Smith Commission’s proposal to devolve Air Passenger Duty to the Scottish Government, and hopes that the administration will maintain its pledge to cut the tax and remove it completely in the longer term,” said Flybe’s chief executive Saad Hammad. “The move would not only encourage airlines to provide new routes and enhance travel for Scotland’s passengers, but it would also significantly boost economic activity and connectivity for Scotland.”

Hammad added he thinks the suggestion showed ‘progress’ and could act as a further encouragement for other parts of the UK to abolish the tax. Next week Chancellor George Osborne will announce his Autumn Statement where any changes to APD would be announced.

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