toggle nav

News

Aviation tax cut will benefit wealthiest in society

Published 22 February 2017 by Colin Howden

Transform Scotland

NEWS RELEASE
Wednesday 22 February 2017

AVIATION TAX CUT WILL BENEFIT WEALTHIEST IN SOCIETY

Transform Scotland [1] has today criticised the Scottish Government’s proposals to cut taxes for the aviation industry. The criticism comes ahead of Transform Scotland’s appearance later today (Wednesday) in front of the Scottish Parliament’s Finance and Constitution Committee as part of its scrutiny of the proposed Air Departure Tax (ADT) Bill.

The Scottish Government has indicated that the proposals in the ADT Bill would allow Air Passenger Duty (APD) to be slashed by 50%, with an aim to abolish the tax entirely by the end of the current parliament. The move would represent a £300m annual tax cut to the aviation sector.

In its response to the Committee’s call for evidence [2], Transform Scotland has raised a number of concerns regarding the impacts of implementing the cut. A reduction in APD would provide a subsidy for the aviation industry, which is already the most lightly-taxed form of motorised transport. The tax cut would also pose a serious threat to the rail services by undercutting rail fares for journeys within the UK. The Bill would also promote most polluting form of transport, which would undermine the Scottish Government’s climate change ambitions.

Furthermore, the proposed cut to the cost of aviation stands to disproportionately benefit the wealthiest in society, raising serious concerns about the fairness of implementing such a cut.

Colin Howden, Director of Transform Scotland, said:

“Aviation is already the most lightly-taxed form of transport. It avoids paying tax on fuel, there is no VAT on tickets, and it benefits from duty-free retail. Cutting taxes for aviation is highly irresponsible at a time when government finances are increasingly stretched. Abolishing APD will lose the Government over £300m a year, funds which could be much better spent supporting vital public services, or in the case of transport, helping to reduce carbon emissions, instead of increasing them. The aviation industry have claimed various economic benefits from an APD cut, yet there is next to no independent evidence to suggest that this is indeed the case.

“It’s well known that aviation is used far more commonly by people on higher incomes. Indeed, around 70% of flights are taken by just 15% of the population. It’s hard to see how tax cuts for frequent fliers will help to meet the Scottish Government’s stated aim to reduce social inequalities.

“It remains to be seen if other parts of the transport budget in future years will have to be cut. It would be grossly unfair if investment in bus services, upon which many of Scotland’s lowest income households depend, ends up having to be cut in order to fund tax cuts for frequent flyers.”

“Subsidising aviation also poses a real threat to rail services within the UK. Companies such as Virgin Trains are predicting losing up to a third of their business on Anglo-Scottish routes if the Scottish Government chooses to go ahead with the tax cut. It’s deeply unfair to make the most polluting form of transport less expensive whilst threatening the viability of rail services, which are far more sustainable.”

Colin Howden concluded:

“Just after the Scottish Government has launched its draft Climate Change Plan, the tax cuts to aviation appear to entirely contradict the ambitions to reduce transport emission set out in the Plan. Aviation is a growing source of carbon emissions, both in Scotland and worldwide. If the Scottish Government is serious about tackling climate change, they need to act fast to reduce aviation emissions, not hand out huge tax cuts to the aviation industry.”

ENDS

NOTES TO EDITORS:

[1] Transform Scotland

Transform Scotland is the national alliance for sustainable transport, bringing together rail, bus and ferry operators, local authorities, national environment and conservation groups, businesses and local transport groups — see <http://transformscotland.org.uk/who-we-are/our-members/> for details.

[2] Transform Scotland evidence paper on the ADT Bill

Available at <http://transformscotland.org.uk/wp/wp-content/uploads/2017/02/ADT20Bill20TransformScotland20evidence202017-02-08.pdf>

END OF NEWS RELEASE