Air Passenger Duty and the devolution of pollution

Oh the heady days of 2014, when up and down the land Scots spoke of breaking free from the anti-business hippies at Westminster and building a Scotland where businesses were free to profiteer and pollute to their heart’s content.  If you’re struggling to remember this happening, it’s probably because it never did.  Yet the devolution of pollution is upon us nonetheless.

I’d forgotten all about Air Passenger Duty (APD) until the referendum campaign; a tax on air travel which was dramatically increased by Labour back in 2007, to some consternation from the airlines.  One person I hadn’t forgotten about though was Willie Walsh.  Walsh is CEO of International Airlines Group (formed from the merger of British Airways & Iberia) and is perhaps best known for his role as an unrepetent evil bastard during the BA Cabin Crew dispute, in which at least 13 crew were sacked and 80 suspended amidst what their Union insisted was a “climate of fear”.  Walsh personally promised to remove travel perks from any staff who dared to take industrial action over the airlines plans for  savage cuts to pay and staffing numbers.  But the old Yes/No game is good at erasing memories and during the referendum Walsh endeared himself to nationalists by being one of the few bosses prepared to go on TV and say Scottish independence wouldn’t result in global apocalypse, so long as we got rid of Air Passenger Duty, obviously.

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Willie Walsh: back to being an evil capitalist bastard [correct as of 19th September 2014.]

Michael O’Leary, the Ryanair chief, was another airline boss prepared to say he’d support a Yes vote/No vote/tinpot dictatorship, so long as it got rid of ADP.  Over the years, he’s done everything from threatening the closure of Prestwick Airport to promising a million extra passengers in Scotland, as he relentlessly and very successfully lobbied the Scottish Government, to the point where it seems our who approach to flying is being directed by…people like him.

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O’Leary will say Yes to whoever gets rid of tax on air travel.

After the second Salmond/Darling debate, an SNP press release hailed “The six job-creating powers that only a Yes vote will deliver” – at number 5, control over Air Passenger Duty.  Despite the absence of said Yes vote, control over Air Passenger Duty is set to be devolved. Even that doesn’t seem to be placating some, with the Transport Minister arguing for the immediate transfer of power and there was even a piece in The National calling for control to be transferred using Section 30 powers (like those used to allow Holyrood to pass the referendum legislation), so we can urgently rid Scotland of the scourge of APD.  Call me a contrarian if you will but, did I miss a meeting here?

I’m not suggesting that the current system for taxing air travel is fair, environmentally beneficial or best left to be legislated on at Westminster.  Air Passenger Duty is a flat and therefore regressive tax which takes no account of the pollution caused by an individual aircraft.  We could come up with something which better accounts for the incredible damage caused by air travel and which ensure airlines pay their fair share, if and when the powers to do so are transferred to Holyrood.  That’s not what Willie & Co.  have in mind – nor is it what we’re likely to get.

So what do the Scottish Government have planned?  Well, nothing.   The immediate plans appear to be to half Air Passenger Duty, although ultimately, the SNP seem keen to emphasise the potential to abolish the tax altogether.  This will doubtless result in increased margins for the airlines, slightly cheaper tickets and increasing levels of air travel (up to 2 million more passengers per year, if the numbers being touted are to be believed).

The economic logic behind scrapping Air Passenger Duty is that the £200m the Scottish Government would lose would be more than made up for by the additional tax paid on the extra economic activity generated – and it’s hard to argue with that.  It’s also a logic which could be applied to any sector of the economy – abolish tax and there will be more productivity, more profit, more pollution and no money to mitigate the consequences of any of those things.   If we’ve got £200m to gamble on the notion that cutting taxes will generate growth, who’s most in need of help?  I’d venture it’s neither airline bosses nor those who pay the treasury a large sum of money every year for their frequent flights around the globe.

All these extra flights have to be paid for; any increase is carbon emissions which is generated will have to be compensated from another sector of the economy if we are to meet emissions targets, the Scottish Government have already confirmed that to be case.  That means making cuts in order to re-engineer our society in favour of air travel, at a time when we should be doing the very opposite. So this becomes less an argument about whether scrapping APD could potentially pay for itself in terms of tax receipts and more a matter of what we prioritise, who we help, which parts of our economy we encourage to grow and what things we try to find ways of doing without.  If we have more planes, we can build less factories.  It really is a zero-sum game from an environmental point of view.

We’ll need to do much more than just meet carbon emissions targets to stop the world ending –  we await the demand for Section 30 powers to do anything about that…

AT LEAST WE GET ROAD SIGNS!!!

Impending Armageddon notwithstanding, scrapping Air Passenger Duty isn’t something that we should have accepted was a “job creating power” during the referendum, it’s not something the Smith Commission should be pontificating over or which warrants demands for Section 30 powers in The National – it’s a tax cut which benefits big business and the consumers of a luxury product.  And it carries with it an environmental, social and economic cost which seems to have been overlooked in our excitement to win and exercise some not-so-shiny new “powers.”

There’s even a suggestion in some quarters that David Cameron might deliver the apparently settled (although not ever really discussed) will of the Scottish people, by scrapping or greatly reducing APD in England & Wales.  The Welsh First Minister is also demanding that powers be devolved to Wales, to allow ADP to be reduced or scrapped there.  So in the end, we could get a flying free-for-all to make sure Ryanair don’t emigrate to Prestwick.  That’s how a race to the bottom works and why it’s counterproductive for the Scottish Government to engage in one, on air travel or any other issue, before or after independence.

When we achieve what I’m sure is our sovereign right, to set the levies for air travel, I sincerely hope the SNP will demonstrate their commitment to creating that fairer, more just Scotland they’re always prattling on about by introducing a system which fairly taxes the airlines and incentivises them to make less polluting aircraft, discourages pointless domestic flights and which uses the revenue generated to reinvest in creating an integrated, public-owned and ideally, ground-based transport system.   I suspect I’m more likely to see those proverbial flying pigs.

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Further Reading:

Another milestone on the path to climate oblivion

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