Why has the devolution of Air Passenger Duty to Wales been rejected?

The UK Government recently rejected calls to devolve powers over Air Passenger Duty to Wales.

Estimated reading time: 2 Minutes

01 October 2019

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

The UK Government recently rejected calls to devolve powers over Air Passenger Duty to Wales.

What is Air Passenger Duty (APD)?

APD is a duty which is charged on all passenger flights leaving the UK. Passengers pay different rates for short haul and long haul flights as part of their ticket price, which is passed onto the responsible government by airlines. Senedd Research  published a blog setting out the status of APD across the UK.

Why has APD not been devolved to Wales?

In June 2019, the UK Parliament’s Welsh Affairs Committee published a report recommending the UK Government set out plans to devolve APD to Wales by 2021. The report concluded:

…if the UK Government has been prepared to devolve the other taxes recommended by the Silk Commission, including the partial devolution of income tax which involves a significant amount of money, it should be able to trust the Welsh Government with APD, which involves only a fraction of this amount.

The Exchequer Secretary of the Treasury responded to the Committee’s report in a letter published on 6 September 2019. This noted that any decision-making relating to APD ‘is not a question of trust’ regarding the Welsh Government and stated:

In the case of APD devolution, the UK government remains concerned about the competitive impact of introducing tax competition within a single aviation market.

The UK Government considers Cardiff and Bristol airports as serving the same market which it states is consistent with State aid guidelines due to both airports being within 63 miles of each other. Consequently, the UK Government claims this presents a different situation to Scotland where APD has been fully devolved and Northern Ireland which has powers to set its own duty for long-haul flights.

The letter explains the UK Government’s rationale for rejecting the devolution of APD to Wales:

Our primary concern is to ensure the best outcome for businesses and consumers on both sides of the border. We do not believe introducing tax competition in this market will be beneficial overall and therefore have no current plans to change APD policy.

What was the reaction?

Welsh Government was critical of UK Government’s decision saying:

Yet again, the UK government has demonstrated its unwillingness to accept the clear evidence that APD should be devolved to Wales. The intransigence of the UK Government’s stance is further compounded by previous decisions to devolve APD to Scotland and Northern Ireland. There is no justification for Wales being treated less favourably than other devolved nations.

David Davies MP, Chair of the Welsh Affairs Committee, was also sceptical of the UK Government’s response finding the argument for rejecting the devolution of APD as ‘not a question of trust, but rather of shared aviation markets, very unconvincing’.

What happens next?

Both the Welsh Government and David Davies MP noted there was unanimous support for devolution of APD from aviation, tourism and business sectors in Wales and would continue to press the UK Government to change its position.

Article by Christian Tipples, Senedd Research, National Assembly for Wales

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