RSE Calls for Review of Proposed APD Reform

The RSE has responded to the Scottish Government consultation on a Scottish replacement for Air Passenger Duty (APD).

The Society has outlined reservations over whether the proposed reform of APD would play a significant role in achieving the Government’s goals of strengthening the Scottish economy, improving connectivity in Scotland and reducing the environmental impact of Scotland’s operations.

APD has proved to be an efficient tax in raising revenue for government. The RSE argues that careful consideration should be given to any decision to decrease such a consistent source of revenue, especially during a period when it is universally accepted that public finances are strained, and are likely to be so for the foreseeable future.

In addition, the RSE believes that the suggestion that reducing APD by 50% would lead to a boost in tourism, job creation and increased productivity in Scotland, is not well established. While it does seem likely that an APD reduction would result in a small increase in tourism to Scotland, there are significant doubts that the suggested reform would achieve the outcomes the Scottish Government seeks for the economy.

One of the Government’s objectives in reforming APD is to improve Scotland’s connectivity with the rest of the world. While strongly in support of this goal, and acknowledging that increased connectivity is an important aspect of improving the lives of the people living in Scotland, the RSE questions the effectiveness of reducing APD upon Scotland’s connectivity. It is unclear to the Society what the significant enhancement would be to connectivity, particularly when the strongest boost to connectivity through air travel accrues to the Highlands and Islands, where airports are already exempt from APD.

The RSE recognises the actions of the Scottish Government in setting some of the most ambitious and challenging climate change targets in the world in the Climate Change (Scotland) Act 2009. However, it is difficult to reconcile these ambitions with the proposed reduction in a tax which plays an important role as environmental tax on carbon emissions.

There is a suggestion that a switch from a per-passenger duty to a per-plane duty could be considered. This step would serve to ensure that sparsely-filled flights, with equivalent emissions, paid the same tax as fuller flights. More importantly, this change would also bring freight transport into this tax base and incentivise this subsector to operate in a more environmentally friendly manner. Such a tax could set bands by fuel efficiency and emissions, and thus encourage airlines to switch to cleaner aircraft.

The RSE has welcomed the opportunity to contribute to this consultation and recommends a significant and rigorous analysis of the proposed APD reform. This should define clear objectives, with supporting evidence on why these are important and how they will be achieved by reducing APD, alongside an outline of the costs and benefits to the economy, public revenue and the environment.

General Secretary of the RSE, Professor Alan Alexander commented, “The case for the reduction of APD has not been effectively made. The RSE is committed to encouraging evidence-based policy making. It is not clear that enough analysis has yet been undertaken to demonstrate the efficacy of the Government’s proposals”.

ENDS.

Press release: RSE Calls for Review of Proposed APD Reform