Why John Swinney is so coy about whether he'd raise airport taxes
John Swinney dare not say he might reduce the airport departure tax to raise greater revenues because that would support arguments for income tax cut
We hear a great deal of talk from political leaders about how important it is we get out and vote, that they really want a high percentage turnout of voters. If that is really the case, then why does John Swinney – who has never yet won a public election to become First Minister – wish to avoid telling us what he would do if he were given the keys to Bute House again?
Surely the point of democratic elections is politicians reveal to us how they would behave if given power so that we are able to judge who would be best for the job? If we are going to be denied knowing what John Swinney would do about taxes, say, then why should anyone bother voting for him?
We need reasons to vote for or against politicians and their parties otherwise we shall be discouraged from voting as we are unlikely to get the change we want or achieve change at all. It’s John Swinney’s duty to tell us his policies and he’s no democrat if he does not.
Yet the current First Minister emphatically refuses to tell us what the SNP’s plans are for the airport departure tax (ADT) he is introducing as the replacement for the UK’s airport passenger duty (APD) from April 1, 2027.
John Swinney will not say if it will simply match the UK duty or be higher or lower. Given how SNP governments have behaved in the past when given control of tax powers, we should expect to see the Scottish departure tax – what we might call the “leaving Scotland tax” – being increased above UK rates.
A report in The Scotsman told us Ryanair believes it would make more sense for a Scottish Government to reduce the Scottish departure tax as that would make it cheaper and more attractive to fly from Scottish airports. When Sweden abolished its passenger tax, Ryanair’s business there increased by some 40 per cent.
John Swinney said the new tax rates would be announced “when the time was right” – but why is the time not right before an election, even if it is just revealing the principle of a higher or lower tax?
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What would it mean if the departure taxes in Scotland are higher than flying from, say, England? Human behaviour already gives us the answer, because the UK’s APD is already higher than other nearby countries and this impacts on how people fly.
For instance, there is no passenger duty charged at all in the Republic of Ireland, and lower rates are charged in France, Germany and the Netherlands – which means it can be considerably cheaper to fly to Dublin, Paris, Frankfurt or Schiphol in Amsterdam and then connect to fly to New York or Cancun than it is to fly from London.
Of course, nestling discretely in this argument is the idea that cutting taxes can generate greater revenues than increasing them – because lower taxes encourage greater economic activity while higher taxes depress it – and so the revenues go above what a higher tax might have brought in. It’s called the Laffer curve, after Dr Arthur Laffer who first observed it.
The undeniable truth is raising or cutting taxes changes our behaviour and it is no different in this regard be it for how frequently we fly and where we fly from – or where we have our income tax residency and how hard we work.
John Swinney is frit; he dare not say he might cut his Scottish departure tax to raise greater revenues for his government because that would support Reform leader Malcolm Offord’s proposals to cut Scottish income tax to raise greater revenue from more economic activity.
At the same time, he does not want to be branded a tax raiser just before an election so wants to say nothing at all. Why then should we vote for a so-called leader who does not give us a lead as to what he will do if we give him the chance?
Interestingly, the UK’s air passenger duty is being hiked once again this week, continuing the trend of Britain having some of the highest passenger taxes in the world.
Although the UK carries just 3 per cent of global passengers, it accounts for 8.9 per cent of global aviation ticket taxes. Passenger taxes are equivalent to 20 per cent of the base fare and are making air travel increasingly unaffordable.
The tax on a premium economy flight to New York will increase by £28 from £216 to £244, meaning a holiday party of four adults flying this Easter will pay £976 between them in tax alone, a rise of £112 from £864 currently.
The tax is not just making holidays more expensive and increasing the cost of living, it's also holding back Britain's aviation industry. The number of airlines operating in Britain is dropping, while in most other countries it is growing.
Tourists are choosing other destinations than the UK (they don’t pay the UK tax coming in but they do pay leaving) and, as explained previously, British passengers now travel via European hubs to avoid sky-high APD.
Ironically, in an admission the tax is a discouragement to economic growth, the UK does not levy APD on flights from Inverness – but the SNP intends to remove that dispensation for international flights, suggesting Swinney would go for higher Scottish passenger taxes, rather than cutting them.
If John Swinney cannot tell us his true intentions, why should we give him our vote?
Brian Monteith is a former member of the Scottish and European parliaments and senior advisor to the Tax Reform Council
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