Axing air travel tax would be 'obvious' move, says think-tank

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The independent, non-partisan group said that just four other European member states have a similar tax, and found there is an "obvious and simple economic case" in favour of the move.

Critics of the policy have claimed that the tax cut will benefit the better off disproportionately and eventually cost £250m a year at a time that public services are already under pressure. However, Reform Scotland said the tax, which will come under the control of Holyrood next year, is "not an ideological issue".

It said Scottish residents would save on air fares if the tax was dropped, and endorsed a previous study carried out on behalf of Edinburgh Airport which said revenue lost from halving and scrapping APD could be at least matched by increases from sources such as job growth, productivity growth and tourism expenditure.

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The think tank's chairman, Alan McFarlane, said: "Reform Scotland believes that the Scottish Government should proceed with its plans to cut the tax. Countries across Europe, including Ireland, Belgium, Holland and Denmark, have scrapped their air passenger tax in recent years. By retaining ours, we are out of step with the rest of the EU.

"This is not an ideological issue. It is an obvious and simple economic case. The economic benefits of cutting or scrapping the tax will outweigh the cost of doing so, which will benefit everyone.

"We encourage all political parties at Holyrood to support the cut in APD, in the best interests of our economy and our people. If they fail to do so it will be up to them to justify why they oppose a measure which a wide range of voices argue will help promote economic growth."

However, a string of groups replying to a recent Scottish Government consultation attacked the policy, to halve the tax by the end of the decade and scrap it completely at an undefined future date, which was included in the SNP's Holyrood manifesto.

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The Church of Scotland said the policy was inconsistent with a policy of cutting greenhouse emissions and would promote inequality with the richest flying more regularly. The Royal Society of Edinburgh warned that if a reduced rate of APD in Scotland led to greater demand for flights from Scottish airports, carriers could simply maintain current prices for consumers while increasing their profit.

Trade Union Unison said a cut to APD would "benefit the wealthiest, while increasing aviation emissions", describing "a lose, lose proposal for Scottish public services and for protecting our world for future generations."

Scottish Greens climate change spokesman Mark Ruskell said: "It's a bizarre priority given the state of public finances for the Scottish Government to want to subsidise the airline industry so frequent flyers can leave Scotland more cheaply.

"The costs to the public purse and the environment are too great for an economic benefit which may be marginal at best and at worst could undermine domestic tourism and rail."

The proposed tax cut has been backed by airlines and business representatives. The Scottish Government has described that APD one of the most expensive taxes of its kind in the world. Ministers have said they will take forward plans for a replacement tax which will help "boost Scotland’s international connectivity and economic competitiveness."

Edinburgh Airport chief executive Gordon Dewar said: "Cutting APD will be a strong demonstration of Scotland's international ambitions and be better value for travellers.

"It will send a powerful signal to the global airline market that Scotland is most definitely open for business, and crucially will lead to the creation of new direct routes."