Cut in air passenger tax would ‘mainly benefit the wealthy’

The Green Party in Scotland has analysed the proposed halving of the tax levied on air passengers leaving Scottish airports and found most of the money saved will go to wealthy frequent flyers and businesses. T&E says the Scottish government’s proposals are just the latest in a series of unjustified government concessions to the aviation industry.

The British government introduced Air Passenger Duty (APD) in 1994, in effect a departure tax on all passengers leaving UK airports. The Scottish government has responsibility for this tax, and has now proposed reducing APD by 50% following pressure from the aviation industry, businesses and media.

In a report, Air Departure Tax: who benefits?, the Scottish Green Party has explored the distributional impacts of the planned 50% cut in APD. Among its findings are that well over half the Scottish public do not take any flights so will not benefit, and most on lower incomes are in this non-flying group. Cutting taxes will cost the Scottish government hundreds of millions in lost tax revenue, about 30% of which will go to businesses. Of the passengers who will benefit, most are UK leisure passengers, and the benefits will go to the wealthiest sections of society.

T&E’s aviation manager Andrew Murphy said: ‘This report affects only the proposals for Scotland, but it is a re-run of a situation we’ve seen played out across Europe many times over many years. And the arguments from the aviation industry are always the same, whichever the country – taxes on aviation threaten jobs, will destroy the economy, and will bring so few benefits it’s not worth the hassle. All the time aviation, the quickest way to heat up the planet, gets away with major tax concessions, like an exemption from VAT. The Scottish government’s plan to reduce APD should be resisted.’

The most recent battle over taxing aviation has come in Sweden, where the government proposed a tax of between €8 and €45 as part of measures to tackle climate change – aviation emissions in Sweden have risen by 40% since 1990 and now make up 5.2% of the country’s total climate emissions (up from 2.8% in 1990). Germany introduced a departure tax in 2011 which, despite warnings from airlines, has had only minimal impact on passenger numbers, and while Ireland did register a fall in passenger numbers when it introduced a departure tax in 2008, this came at the time of a massive downturn in the Irish economy and was not due to the tax.