Sunday, 24 July 2016

Air Passenger Duty: Wales grounded by Westminster as Scotland and Northern Ireland take off



  There's nothing more useful than a major international controversy as an opportunity to bury a whole host of smaller domestic problems. So while Britain was busy voting to make itself "Great again", George Osborne, now former Chancellor of the Exchequer, quietly caved into English aviation interests and reneged on a commitment to devolve control over Air Passenger Duty (APD) to Wales.

  On the face of it, APD is such an obscure little tax that readers might be inclined to wonder what the fuss is all about. But the interesting and revealing thing about APD is not so much the support it engenders in Wales (an online poll for the Western Mail showed 78% in favour) but the reaction it has generated on the other side of Offa's Dyke.

  So, for the uninitiated (author included!), what is Air Passenger Duty? It's broadly defined as "an excise duty which is charged on the carriage of passengers flying from a UK or Isle of Man airport on an aircraft that has an authorised take-off weight of more than ten tonnes or more than twenty seats for passengers". To get a sense of the wider importance of APD as a tax it's worth quoting the UK Treasury itself;

         "Air Passenger Duty is primarily a revenue raising duty which makes an important 
          contribution to the public finances, while also giving rise to secondary environmental 
          benefits"

                                                                                                                     UK Treasury, 2011

  Ironically, APD was put on the political agenda in Wales by the very same Tories that have just put the kibosh on it. In 2011, the Silk Commission - set up by then Welsh Secretary Cheryl Gillan - recommended devolving control over APD to the Welsh Government, It should be noted at this point that both Scotland and Northern Ireland both already have control over this tax.

  The Silk Commission took their data from the Civil Aviation Authority, who estimated that APD raised just over £7.5million in Wales in 2011. This figure might sound like a drop in the ocean in the context of identifiable public spending of £30 billion in Wales in 2010-11 but it's not quite that simple. So read on!

  Needless to say, having let this particular taxation genie out of the bottle, it rapidly proceeded to magic up a considerable amount of support across the political landscape in Wales. Welsh Conservative leader Andrew RT Davies stated it was "perverse" not to devolve control over APD to Cardiff, while Comrade Carwyn agreed that it was "completely unacceptable" for Scotland and not Wales to get powers over the tax. Plaid, of course, want rather more than just control over APD.

  Outside of the Cardiff Bay bubble, support has also steadily grown across the aviation industry in Wales. Not surprisingly, Wales' only major airport is a firm supporter of devolving APD. But a spirited online campaign also finds focus with websites such as APD4Wales calling for the "punitive tax" to be scrapped. 

  Meanwhile, on the other side of the Bristol Channel an equally spirited campaign has sprung up in defence of the status quo. Needless to say, this campaign has won a temporary victory, at least. At the forefront of this campaign is Bristol Airport. But in making the economic case for the status quo, Bristol Airport has also helpfully outlined the economic benefits for Wales too. The airport's Chief Executive has been quoted in the press as stating that devolution of APD to Cardiff could cost the south-west economy 1500 jobs and £843 million. in GVA (Gross Value Added) over the next decade. This puts our previously-cited £7.5 million figure in a rather different light...

  Perceptive readers will note that Labour, the governing power in Wales, have largely been left of the hook so far in this piece. In the run-up to the Budget, Welsh Finance Minister Jane Hutt blasted the Chancellor's "unacceptable procrastination" and went on to say that; 

        It would pave the way to improved international air links with the rest of the world, which                  would bring economic benefits not just to Wales but also businesses and citizens in the South 
         West of England, helping to stimulate business and trade"

This very magnanimous sentiment didn't cut any mustard with her Labour colleagues on the other side of the Channel, however. Bristolian Labour MP Karin Smyth congratulated the Tory Government's decision as "very welcome news for the South-west economy". Which just goes to show what a mendacious game the Labour Party is content to play with Wales, it's traditional playground. 

Which all goes to show what a raw deal we have in the so-called "United Kingdom". We are the only constituent part of the UK not to have control over this small tax. The economic benefits to Wales are clear, and in ignoring Welsh interests, it should be clear that Westminster is holding the Welsh economy back. We're better off out of the Union altogether. But in making the case for being out of it, it's worth articulating a basic point of principle; as APD4Wales put it;

             "A tax on flying from Wales should not be set by an English government"

To be continued....











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