Mackay rebuked after failure to order report into air duty cuts
Labour hits out at ‘embarrassing revelation’ amid row over tax
THE Finance Secretary has admitted not ordering any independent research into his £160 million plan to cut air passenger duty north of the Border.
Amid growing criticism over the lack of hard evidence to justify the tax cut, Holyrood’s Finance Committee told Derek Mackay he had better commission a report into its impact soon.
The embarrassing rebuke came after Mr Mackay told MSPs he wanted to fill in details of the policy only after Holyrood had passed his Air Departure (Scotland) Bill.
Air passenger duty (APD) is due to be devolved to Holyrood from April 2018.
The SNP’s Holyrood manifesto said it would cut APD by half in the current parliament at a cost of around £160m a year, then abolish it when resources allowed.
Passengers currently pay £13 or £26 on standard short-haul flights, and £73 or £146 for longer-haul flights, with private jet passengers paying up to £438 each.
Airline operators say a cut will boost the number of services from Scottish airports and hence help the economy.
Critics say there is little evidence for an economic uplift, and warn more flights will worsen pollution and undermine the SNP’s climate change targets.
Last month former SNP Justice secretary Kenny MacAskill said it was “hard to see a credible argument” for the tax cut, “other than the enrichment of airlines and airport operators”.
He said: “Environmentally, commercially and logistically the cuts to APD make little sense… many low-paid workers will look askance at a cut on a ticket to a long-haul destination they can only dream of.
“Meanwhile, the train or bus fare needed to get to their work is rising.”
Mr Mackay told MSPs his officials had looked at other reports and at the impact of reductions in Ireland, but ministers had not ordered their own study.
He said he wanted to get the bill passed before summer recess, then specify new APD rates and bands through secondary legislation in the autumn. Parliament could then scrutinise those details at a later date, he said.
He conceded: “On the environmental side, obviously there has to be more work done around the specifics of the policy. This stage is the enabling legislation to allow us to collect the tax. Looking at the Government’s ambitious environmental policies, it is recognised that we will have to work harder in other areas to recognise that such a policy could lead to an increase in emissions.”
He continued: “We haven’t commissioned, to the best of my knowledge, any independent research of our own. If committee wishes me to look at that, I will certainly consider that.”
SNP convener Bruce Crawford said there has been “wideranging criticism” about the lack of evidence on the environmental and economic impact of an APD cut.
He told Mr Mackay: “I think you can take it as read ... that the committee will be asking you to carry out that independent economic assessment.”
Scottish Labour’s Neil Bibby said the lack of research was “an embarrassing revelation” from Mr Mackay, who last month climbed down over business rate increases.
Green MSP Patrick Harvie said: “The case for this tax cut fell apart the moment the committee’s scrutiny began.”
Tory MSP Murdo Fraser said current evidence for and against the APD cut was “poor”, and urged Mr Mackay to produce a “proper economic analysis” when he sets out rates and bands.