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Think Tank Calls For Scottish APD To Be Scrapped

by Robert Lee,, London

19 August 2016

Think tank Reform Scotland has called on the Scottish Government to bring forward its planned reductions to the Air Passenger Duty (APD), with a long-term aim of scrapping the tax altogether.

Power over APD will be devolved to Holyrood under the Scotland Act 2016. The SNP Government has said that it is committed to reducing the overall burden of APD by 50 percent. Its manifesto for the May 2016 election pledged the introduction of initial reductions in April 2018, and the full delivery of the promised cuts by 2021. The party intends to abolish the APD entirely when resources allow.

Reform Scotland pointed out that although the SNP was the only main party to advocate a rate cut at the election, the Conservatives have since reversed their opposition.

"Reform Scotland believes that the Scottish Government should proceed with its plans to cut the tax. We welcome the Scottish Conservatives' decision to reverse their position and encourage the other opposition parties to also reconsider their positions and act in the best interests of our economy and our people. 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 and reduce the cost of Scottish families going on holiday," it said in a new policy briefing.

The briefing pointed to the findings of a recent study by Edinburgh Airport, which concluded that a 50 percent reduction in ADP would result in around 700,000 additional passengers passing through Scotland's airports, and initially support 800 new jobs and GBP33m (USD43.3m) in Gross Value Added (GVA). The impact on tourism spending was estimated at between GBP56m and GBP68m a year.

"The estimates of the wider business impacts suggest that long-term productivity benefits may support between GBP81m and GBP90m per annum in GVA," the briefing stated.

Reform Scotland said that reducing APD rates would result in the loss of around GBP650m in revenue over the period to 2020. However, "when set against total GVA, this suggests a benefit-cost ratio for reducing ADP by 50 percent of around 1.6," it argued.

TAGS: tax | business | air passenger duty (APD) | United Kingdom | tax rates | tax reform | Scotland

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