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Government 'has failed to give detail'

Tax experts question benefit of scrapping APD

Tax experts have accused the Scottish Government of failing to spell out how its planned replacement for air passenger duty will bring any benefits to the tax payer.

APD generated £275 million for the Scottish government in 2015/16 but it claims the tax is an unfair burden on passengers and a restraint on the economic growth. It plans to cut the tax by half next April and replace it with a new tax when resources allow.

The Chartered Institute of Taxation (CIOT) welcomed moves by the Scottish Government to address concerns previously raised by CIOT over the possible double taxation of connected flights, but called for greater transparency in the Bill to replace APD.

Moira Kelly, chairman of the CIOT Scotland technical committee said: “Of all of the tax powers being devolved to the Scottish Parliament, the proposed replacement of APD has been the one that has generated the most interest and debate, despite accounting for a relatively small share of the country’s overall tax receipts.

“We think it is important for the Scottish Government to publish as much detail as possible while the bill is being considered in parliament in order to allow for robust and effective scrutiny and greater clarity around what these reforms can deliver.

“In particular, we think that there is a case to be made for using this legislation to outline who will pay what, when they will pay it and who will be exempt – as is the case in UK legislation.  In the absence of information such as this, it is very difficult to say with any degree of certainty what benefits – if any – this change will make.” 

She added that there were vested interests behind the campaign to scrap APD.

“Until now, the case for reform has been driven largely by those industries most likely to benefit directly from these reforms,” she said. “Publishing an independent review to complement studies already undertaken by the aviation industry will add further transparency to the process.”

The CIOT was responding to a call for evidence on the Air Departure Tax (Scotland) Bill issued by the Scottish Parliament’s Finance and Constitution Committee.

Labour transport spokesperson Neil Bibby said: “The SNP has not offered anywhere near enough detail on their plans for a tax cut which will benefit the wealthiest the most.

“The reality is that cutting Air Passenger Duty won’t make Scotland fairer or greener. It would be the wrong move at the wrong time.

“We should be doing all we can to boost sustainable travel, encouraging people to travel on trains where possible for short domestic journeys.

“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.

“With record passenger numbers at Scottish airports it would be the wrong move to offer a huge tax break to airlines which simply don’t need it, and kick off a race to the bottom with other parts of the UK.”

 

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