Is­lands flights could be hit by new tax

The Oban Times - - NEWS -

FEARS have been voiced that pas­sen­gers us­ing High­lands and Is­lands air­ports could face a hike in fares be­cause of a tax on flights.

The con­cern comes after the Scot­tish Par­lia­ment was told last week that plans to re­place air pas­sen­ger duty with a dis­counted al­ter­na­tive have been dis­rupted by le­gal is­sues.

The Scot­tish Gov­ern­ment wants to re­place Air Pas­sen­ger Duty (APD) with a new de­volved Air De­par­ture Tax (ADT) in Scot­land from April next year.

How­ever, it said plans to con­tinue ex­empt­ing jour­neys from air­ports in the High­lands and Is­lands re­quired EU ap­proval un­der state aid rules. It is un­der­stood that get­ting this ap­proval could take longer than Brexit.

Fi­nance Sec­re­tary Derek Mackay told MSPs that the ‘mess’ was the UK gov­ern­ment’s fault, say­ing it could cost the Scot­tish Gov­ern­ment £320 mil­lion to main­tain the exemption in the mean­time.

West­ern Isles MSP Alas­dair Al­lan has backed a Scot­tish Gov­ern­ment pro­posal which would en­sure is­land air­ports to con­tinue to be ex­empted from ADT.

An exemption from APD for flights from the High­lands and Is­lands has been in place since 2001. Trans­fer­ring the exemption to the new ADT re­quires no­ti­fi­ca­tion to the Euro­pean Com­mis­sion (EC) which can only be done by the UK Gov­ern­ment, as the mem­ber state.

The UK Gov­ern­ment has placed con­di­tions on this, and asked the Scot­tish Gov­ern­ment to ac­cept full li­a­bil­ity for all the risks, in­clud­ing the po­ten­tial knock-on ef­fects on busi­nesses, if the EC does not ap­prove the exemption.

At Holy­rood last week Mr Mackay told MSPs that the Scot­tish Gov­ern­ment would not put the economies of the High­lands and Is­lands at risk and out­lined an al­ter­na­tive pro­posal, which would use tax rates and bands to pro­vide the same ben­e­fit for all High­lands and Is­lands flights, in­clud­ing con­nect­ing flights.

Dr Al­lan said: ‘The exemption to ADT, which has been in place since 2001, is vi­tal in keep­ing the high cost of fly­ing from the West­ern Isles un­der some con­trol.

‘The UK gov­ern­ment is propos­ing to work against pre­vi­ous agree­ments that there should be no detri­ment to ei­ther gov­ern­ment as a re­sult of de­vo­lu­tion of fur­ther tax pow­ers.

‘It is not ac­cept­able that the UK gov­ern­ment’s con­di­tions of no­ti­fy­ing the Euro­pean Com­mis­sion could cause the Scot­tish tax­payer to forego rev­enue for de­liv­er­ing the cur­rent is­lands exemption.

‘I am pleased that the Scot­tish Gov­ern­ment has out­lined al­ter­na­tive pro­pos­als which would avoid risk­ing that.

‘The UK gov­ern­ment has in­di­cated that it is will­ing to de­lay the de­vo­lu­tion of ADT. How­ever, I do not be­lieve that this is an ac­cept­able pro­posal, and should only be con­sid­ered as a last re­sort to pro­tect the High­lands and Is­lands from fi­nan­cial detri­ment.’

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