Air Departure Tax: Who Benefits?

By | Category: Travel rumblings

This is the name of a report issued on Monday by a campaign group called Fellow Travellers, “a not-for-profit, unincorporated association campaigning for fair and equitable solutions to the growing environmental damage cause by air travel.”

The thirty-four page report assesses the impact of the planned cuts by the Scottish government to Air Passenger Duty (APD) and its replacement by Air Departure Tax (ADT) which may come into force in 2018.

Although the study relates to Scotland, other devolved nations are considering the impact of scrapping or reducing  (as it becomes devolved to them) APD so the analysis by Fellow Travellers has a wider impact.

Initially the Scottish government plan to halve the rate of APD and abolish it when circumstances allow. After all, what government wants to remove a revenue stream? Any taxation lost has to be found either in savings or in a new source of revenue. The report says that the Scottish treasury will lose hundreds of millions of pounds in the lifetime of the parliament and that the tax reduction is “predominantly a tax giveaway for Scotland’s wealthiest households and corporations.”

The logic is easy to understand and doesn’t require an economics degree and probably not a report either. Business people fly and they will benefit by paying less tax. You could argue that this might encourage business people to fly and sell more of their products elsewhere thus contributing to the treasury through paying more taxes on their profits. The report doesn’t consider that likelihood.

That richer, Scottish households might benefit because they travel more than poorer ones is also fairly obvious. The more people fly the more they will benefit because they will pay less tax each time. If you don’t fly at all you won’t benefit at all. The conclusion that the poorer families won’t benefit is blindingly obvious. They aren’t paying for airline tickets and the tax in the first place.

The report sees any tax reduction – by whatever name it is called – as a subsidy on leisure flights.

It spends the rest of the report justifying its case that the rich will be better off, the poor will lose out and the Scottish treasury will have to raise money elsewhere.

If it really wanted to justify retaining APD it could look at why fares from the Netherlands, Ireland, France and Germany, for example, to the Far East are no cheaper than those from the UK. Yet those countries do not operate APD.

Yet again we have a report that rehashes old ideas, presents few new ones preferring to rely on hoary old arguments instead.

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