Cutting Air Duty Will be a Boost for Scotland

March 9, 2015 Taxation in UK

LONDON – Cutting taxes on flights out of Scotland will reduce tax revenues, but the loss will be more than offset by a boost to employment and economic activity.

Over the weekend the Edinburgh Airport released the results of new research showing that a 50 percent reduction in the rate of air passenger duty in Scotland could lead to the creation of 3 800 new jobs along with a GBP 1 billion boost to the economy over the next 5 years.

Currently air passenger duty in the UK is set at a rate of between GBP 13 to GBP 194, based on the distance travelled, and in 2013 approximately GBP 200 million was raised in revenues from the tax levied on flights to and from Scotland.

In the report it was noted that the rate of the duty is currently set by the UK government, hover it has been proposed that the power to set the tax should be devolved to the government of Scotland, with any arising revenues or losses to be accounted for by the Scottish government themselves.

The revenue loss arising from the cut to the rate may be as high as GBP 110 million per year, however, the negative impact should be more than offset by the positive impact that the cut should have on Scotland.

Photo By: Ronnie Macdonald