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Overview —

An analysis of the SNP's proposal to half and then eliminate Air Passenger Duty - to be renamed the Air Departure Tax when it is devolved - finds that the economic evidence used to justify the tax cut omits the impact of an increase in outgoing passengers. Once this impact is factored in it is found that cutting the tax may act to reduce the total number of tourists in Scotland and reduce the overall GVA of Scotland and will thus not be able to re-coup the lost tax revenue through increased economic activity.

Other impacts such as the beneficiaries of the tax cut mainly being concentrated in the aviation sector (particularly those Scottish airports which both rely on tourist traffic and have the capacity to expand to cater for extra demand) and the impact of the overall strength of the pound since the 2016 EU referendum are also explored.

Credits —

Dr Craig Dalzell

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An analysis of the SNP's proposal to half and then eliminate Air Passenger Duty - to be renamed the Air Departure Tax when it is devolved - finds that the economic evidence used to justify the tax cut omits the impact of an increase in outgoing passengers. Once this impact is factored in it is found that cutting the tax may act to reduce the total number of tourists in Scotland and reduce the overall GVA of Scotland and will thus not be able to re-coup the lost tax revenue through increased economic activity.

Other impacts such as the beneficiaries of the tax cut mainly being concentrated in the aviation sector (particularly those Scottish airports which both rely on tourist traffic and have the capacity to expand to cater for extra demand) and the impact of the overall strength of the pound since the 2016 EU referendum are also explored.