Hansard

Every party that is represented in the Parliament is a signatory to the Smith agreement. As all the previous speakers have said, a commitment was given as part of that agreement to devolve to this Parliament power over taxing the carriage of passengers from Scottish airports. That commitment, which was supported by all parties, should be honoured, and it is for that reason that Scottish Labour will vote to allow the Air Departure Tax (Scotland) Bill to progress beyond stage 1.

As has been said, the bill is an enabling bill that is supported in principle by the Finance and Constitution Committee. It is required if we as a Parliament are to give the Scottish Government the authority to switch on a new air departure tax when air passenger duty is switched off in Scotland next year. For us, endorsing the bill at stage 1 means endorsing the principle that the Scottish Government should levy its own air departure tax, in line with the conclusions of the Smith commission. It does not in any way mean endorsing the Scottish Government’s approach to what the rates and bands of ADT should be. Scottish Labour objects to the Scottish National Party’s plans to cut air passenger duty in half and then phase out the tax entirely, and we will vote against cuts to ADT rates when the time comes.

We support the bill because we believe that there should be an air departure tax, but we oppose a tax cut for the aviation industry because it is the wrong priority at the wrong time. Across Scotland, our schools and local services are facing hundreds of millions of pounds of cuts. At a time when we should be protecting the services that people rely on and finding new ways to invest in our communities, it is absurd that a tax cut for the aviation industry should be the SNP Government’s priority, and it is unacceptable that the Scottish Government cannot tell us what the impact of its proposals to cut the tax will be on the budget.

Since 2011, this Government has cut £1.5 billion from schools and local services, with £117 million of those cuts falling in Renfrewshire, which the finance secretary and I represent. Across Scotland, SNP cuts threaten schools, care services, road repairs and more. There are public sector workers who cannot afford to make ends meet and there are many local services that our councils cannot afford to sustain, yet the SNP tells us that it can afford to make a business-class flight cheaper.

It is estimated that the value of the tax break could be as high as £189 million. As James Kelly said, the key question for the finance secretary to answer is what will be cut to pay for it. The axe will have to fall somewhere. Will it fall on schools or on hospitals? Will it take the form of cuts to bus passes for the elderly? It is time for the SNP to be honest about its plans. Alternatively, are we just set to see £189 million of unspecified cuts over the next few years?

A 50 per cent cut in APD will not make Scotland any fairer. Analysis from the Office for National Statistics indicates that halving APD would save the top 20 per cent of earners £73 a year while saving the poorest an average of only £4.50 a year. Those on higher incomes fly more often, so they will benefit the most from any cut.

A 50 per cent cut in, or the complete phasing out of, ADT will not make Scotland any greener, either. The Scottish Government accepts that it could lead to a 3 per cent increase in aviation emissions, which could have a severe negative effect on our climate. The leaders of every party that is represented here today signed up to the climate change agreement, which committed us to building a low-carbon transport system for Scotland. Incentivising air travel at the expense of cross-border rail will contribute nothing to the fight against climate change.

As has been said, the Finance and Constitution Committee has recommended that the Scottish Government publish an analysis of the likely increase in carbon emissions arising from the proposed tax break. The committee also recommended that amendments be lodged at stage 2 to place a duty on ministers to report every second year on the socioeconomic and environmental outcomes from the air departure tax. However, we should go further and ensure that stronger safeguards are written into the bill at stage 2.

The Scottish Government has not presented us with a convincing case that a tax cut will make Scottish aviation any more competitive. The Government decided on its policy before considering the facts and is only now commissioning research to back up its claims. However, we know now that changing the tax regime will not, in itself, boost connectivity or improve our infrastructure.

There was some discussion in the Finance and Constitution Committee about the Irish experience of abolishing APD, which is interesting. The growth in passenger numbers that is often attributed to the tax cut in Ireland actually coincided with growth in passenger numbers across Europe, including in Scotland, so it is not at all clear that the tax cut was a stimulus for growth. As Chris Day from Transform Scotland pointed out,

“It is noticeable that the upturn in flights at Dublin was in hand before Ireland abolished APD.”—[Official Report, Finance and Constitution Committee, 22 February 2017; c 25.]

Here in Scotland, Edinburgh airport recorded an 11 per cent increase in passengers in 2016 despite the existing APD regime being in place. We regularly see motions from MSPs across the Parliament welcoming new routes and record passenger numbers at their local airports, celebrating the success of the Scottish airports but, at the same time, undermining the minister’s case that an ADT cut is a necessity.

There is no evidence that the Scottish Government’s chosen approach to air departure tax will make Scotland fairer, greener or more economically resilient. Next to no evidence has been produced in support of the Scottish Government’s case. The Finance and Constitution Committee says unequivocally in its stage 1 report:

“there was considerable consensus across all spectrums of opinion that the evidence base underpinning the proposed reduction required development ... the proposed reduction in ADT currently lacks an adequate evidence base.”

The Scottish Government says that it intends to listen and consult before it sets ADT rates and bands later this year, but we already know from the existing Scottish Government consultation that there is widespread opposition to the proposed tax cuts. If, following a consultation, Mr Mackay finds yet again that there is opposition to an ADT cut, will he abandon his plans for an airline tax giveaway? We would welcome an answer to that question.