S4M-10185 Air Passenger Duty

The Presiding Officer (Tricia Marwick): The next item of business is a debate on motion S4M-10185, in the name of Keith Brown, on air passenger duty.

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Stewart Stevenson (Banffshire and Buchan Coast) (SNP): I last spoke on APD in November 2012, as many other members also did. There has been an awful lot of talking about it and it is perhaps time that we should think about what Benjamin Franklin once said:

“Well done is better than well said.”

It is now time to move from talking about things to actually doing things.

The debate has been quite interesting. I suspect that I could make quite significant common cause with Elaine Murray and perhaps one or two others. However, I want to talk about two things: the economics of the issue and the environmental benefits that might come from a different approach.

I will run through some figures. I have done the calculations on the back of an envelope, so I do not pretend that this is anything like the final word on the subject.

An average vacationer coming on a short haul vacation to Scotland will spend 3.6 nights here. If they spend the average amount of money on a hotel—£120 per night—they will contribute £72 in VAT. Let us treat that as new tax from someone who would not otherwise be coming. They will probably get a taxi to the centre of Edinburgh from the airport and another taxi back out to the airport, because the kind of tourist—[Interruption.] Yes, they might get the bus or the tram. I am in favour of trams. They are on the wrong route, but that is an issue for another day.

The money that they spend on the taxi journeys will contribute another £4 in fuel duty and VAT.

They will have three restaurant meals. At, let us say, £25 a time, that represents a further £15 in tax. We are now up to £91 in tax and we have not yet taken account of the money that they will undoubtedly spend in our shops. When I do my little calculation—capable of being criticised, but based on principles that cannot be argued with—that comes to a tax take, for a new passenger on an average short visit, of something of the order of £150 to £200. The APD is around £20 and, of course, the idea is that removing that £20 charge from everybody who comes attracts new people.

I do not think that there has been enough economic analysis of that subject in the debate so far, and I think that we should consider it further. I do not think that we have reached the end of the story on economics but there is a clear indication that, if you get new people here, you get new tax take. We have to ensure that we get enough new people—

Gavin Brown: Will the member give way?

Stewart Stevenson: I will not, for time reasons and because, as I said, my argument is not complete and comprehensive. I will let the member address his point in his closing remarks.

I think that Patrick Harvie said that all airlines pay no VAT. That is not quite true. In Scotland, the routes from Oban to Coll, Colonsay and Islay, from Kirkwall to the outlying islands and from Tingwall to the islands in Shetland all pay VAT on their fuel, because they burn aviation gasoline rather than aviation turbine fuel. I admit that that is a small proportion of what goes on. To be honest, it does not seem to make very much difference one way or the other. There is certainly a case for considering the way in which we tax airline operating companies.

Of course, the essential thing is that APD is a regressive tax. We charge people the duty and deny ourselves more.

Let us talk about environmental issues. In the previous debate on this subject, I talked about a few such issues. It is fine to talk about the need to have powers over APD, but what we actually need are the powers over the whole picture. If APD is the answer, it is a very silly question indeed.

This would be a crude way of doing it but we could say that turbo-prop aircraft will pay less APD per passenger, because they are less polluting, as they burn less fuel per mile and they fly lower, which means that the radiative forcing effect is reduced. If someone is down at the bottom, in an unpressurised aircraft flying little flights around Scotland, their radiative forcing is halved again, and their fuel cost goes down to a third.

We could adopt the Norwegian model. In Norway, many commuter flights are flown in aircraft such as the Cessna Caravan, which is a single-engined turbo-prop aircraft—a type of aircraft that, by the way, has a better safety record than multi-engined aircraft. The American Federal Aviation Administration has all the numbers on that. Almost uniquely, the UK will not allow such an operation for our scheduled services in instrument conditions. That would have an environmental as well as an economic benefit; it would also make some routes—from Skye to Glasgow, for example—more economically viable.

APD is part of that; we can do things with it. As I said in my 2012 speech, we could have differential APD for airlines that towed their aircraft adjacent to the runaway because, on average, that prevents five tonnes of fuel burn in a 757. Five tonnes of fuel is burned just to get a plane from the stand out to the take-off point: tow them out and save 5 tonnes. APD should be used to encourage airlines to do that: because they need to invest in tow trucks, we give them something in return.

It’s not just about gaining APD; it is about having all the policy levers that surround APD. That is a huge difficulty in how the devolution settlement has been constructed and operates. I am not saying that anyone set out to do that deliberately. They did not; rather, they set out with a good and honest heart to construct a settlement, but it does not work. Little bits have been devolved piecemeal, instead of whole policy areas being devolved to allow a proper co-ordinated approach to all the issues in an area.

Let us get APD devolved, because we could use it more imaginatively and for economic and environmental benefit. However, if we also had all the surrounding powers, we could do so much more. It is in that spirit that I say that, whatever the outcome in September, let us get APD. Even in the event of a yes vote, we will still be under Westminster until 2016, and there is time to get the benefits more quickly. A yes vote would, however, guarantee that we would have those powers sooner rather than later, and forever.

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