SNP accused of trying to "weasel out" of controversial air tax cut

The opposition claimed he was running scared of an increasingly controversial SNP policy, while the UK Treasury said he was trying to "pass the blame" for designing a flawed tax.

Gordon Dewar, Chief Executive of Edinburgh Airport, also suggested Mr Mackay’s objection was overblown, and said the government “must show leadership” and press on.

Scottish airline Loganair said it was “very disappointed” by the hold up.

The SNP has pledged to cut the tax burden on air passengers by 50 per cent by the end of the parliament - a policy opposed by all other parties bar the Tories.

Advocates say it will increase traveller numbers and boost the economy, while critics say it will add to pollution and the money could be better spent on other public services.

With the Scottish Greens refusing to support next year’s budget if the new air departure tax (ADT) is cut at the expense of other services, Mr Mackay was accused of using a technical excuse as convenient political cover for a delay.

However the Finance Secretary insisted there was a genuine problem which originated with the UK government, and it was their responsibility to put it right.

He explained Highlands and Islands airports had been exempt from air passenger duty since 2001, and the Scottish Government wanted them to remain exempt from ADT as well.

However the UK never notified the European Commission about the exemption, which could be regarded as unacceptable state aid.

The UK had now offered to notify the EC - but only if the Scottish Government accepted full liability for any resulting bill, possibly tens of millions of pounds.

The Scottish Government had refused, and said the UK had to bear the cost.

Mr Mackay had also offered an alternative - a revised ADT system that worked around the state aid issue, but which would cost the Treasury £328m a year.

He has asked the Treasury for a decision by the budget on November 22.

However even if the UK did refer the matter to the EC, it might take months to resolve, and it remained unclear if ADT could begin as planned in April.

The UK Government has suggested delaying the transfer of the tax indefinitely in the absence of any solution.

Mr Mackay said there would be a “catastrophic effect” on the Highlands and Islands if the exemption was lost: “I cannot see ADT put into operation with this significant uncertainty hanging over the Highlands and Islands.

“I urge the UK Government to step up to the plate, to recognise their responsibilities and to support our proposal which would enable ADT to go forward as planned without causing harm to the Highlands and Islands economies.”

He said the SNP policy remained to cut the tax in half by 2021 and abolish it if possible.

However there was widespread scepticism about his motives.

Tory Murdo Fraser said there was a clear SNP-Tory majority in the parliament to deliver an ADT cut.

“The Scottish Government seem to be trying to weasel out of their manifesto commitment, meaning we could miss out on the boost this would deliver to the Scottish economy. There will be many in the tourist sector who feel badly let down.

“A cynic might conclude the announcement has more to do with politics, and the SNP’s desire to pally up with the Greens again to get their budget through parliament, rather than with any legal technicalities.”

Green MSP Patrick Harvie said the delay was “another nail in the coffin” of a bad policy.

He said: “Scottish Ministers might feel they need a technical excuse for dropping their plans this year, but the longer term issue remains that the SNP policy is unjust and unsustainable.

"The writing has been on the wall for this daft policy for some time. Given the legal mess the Scottish Government has waded into as it panders to the aviation industry, ministers need to give up on this policy and focus instead on the public's priorities."

Labour’s Neil Bibby added: “Passengers in the Highlands & Islands have received an exemption for years and exemptions must continue.

“Derek Mackay is telling us that he can’t switch on Air Departure Tax despite the Parliament passing a piece of legislation agreeing to do so.

“The SNP is using a convenient opportunity to kick a bad policy into the long grass.”

Scottish LibDem leader Willie Rennie welcomed the pause on tax cuts, saying it would mean “more investment for public services and greater protection for the environment”.

But he added: "It is reckless of the SNP Government to put at risk the future of the Highlands and Islands exemption by claiming it is defective and not compliant with EU Law.

“This may force the European Commission to close down the scheme which has served the people and economy of the Highlands and Islands for sixteen years.”

Mr Dewar said: “We are naturally frustrated. We appreciate that there are legal complexities around this issue. However our understanding is that the current exemption is unlikely to be challenged and even if it is, it’s likely to be found compatible with state aid rules.

“The Scottish Government must show leadership and a commitment to deliver by working on two fronts. It must plan for scenarios in which the UK Government finds a solution to this complexity, but also work on implementing Scotland’s own scheme if not so another window of opportunity doesn’t fly by without this promise being fulfilled.”

“The tourism and business sectors will benefit if their markets become more accessible so we cannot afford to cap our success. We need the government to deliver so we can all plan and capitalise on the benefits that will open up to us.”

Glasgow airport boss Amanda McMillan said: “We are very disappointed. Not only is the current APD format the highest form of aviation tax in the world, it is also a regressive one which continues to stifle Scotland’s ability to compete in domestic and international markets.

”We urge the Scottish and Westminster governments to work together to find a solution.”

Loganair Managing Director Jonathan Hinkles said: “We believe there are strong economic and environmental grounds to exempt all regional flights in Scotland and are very disappointed to learn from today's statement that this prospect has been delayed.

“Although we understand the position in which the Scottish Government has unfortunately found itself, it looks as though this will now hold back developments that would grow both tourism and business travel within Scotland, and that delay will be detrimental.”

A spokesperson for HM Treasury said: “It is disappointing that the Scottish Government has been unable to design a tax which is compliant with EU law. It is wrong for them to try and pass the blame for their unwillingness to take responsibility for their own tax.”