MSP moves to safeguard Islands tax exemption

An exemption from Air Passenger Duty (as the tax is currently called) for flights from the Highlands and Islands has been in place since 2001.

Transferring the exemption to the new Air Departure Tax requires notification to the European Commission which can only be done by the UK Government, as the member state.

The UK Government has placed conditions on this, and asked the Scottish Government to accept full liability for all the risks, including the potential knock-on effects on businesses, if the Commission does not approve the exemption.

In a statement to Parliament, Finance Secretary Derek Mackay said that the Scottish Government would not put the economies of the Highlands and Islands at risk and outlined an alternative proposal, which would use tax rates and bands to provide the same benefit for all Highlands and Islands flights including connecting flights.

Commenting, Dr Allan said: “The exemption to ADT which has been in place since 2001 is vital in keeping the high cost of flying from the Western Isles under some control.

“The UK Government are proposing to work against previous agreements that there should be no detriment to either government as a result of devolution of further tax powers.

“It is not acceptable that the UK Government’s conditions of notifying the European Commission could cause the Scottish taxpayer to forego revenue for delivering the current islands exemption. I am pleased that the Scottish Government have outlined alternative proposals which would avoid risking that.

“The UK Government have indicated that they are willing to delay the devolution of ADT, however I do not believe that this is an acceptable proposal, and should only be considered as a last resort to protect the Highlands and Islands from financial detriment.

“The UK Government must urgently look at the Scottish Government’s proposals, and enter into meaningful discussions which will enable ADT to go forward as planned, without damaging the islands’ economy.”