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Devolution of Air Passenger Duty to Wales - Report Summary

This is a House of Commons Committee report with recommendations to the Government. The Government has two months to respond.

Author: Welsh Affairs Committee

Date Published: 11 June 2019



Contents

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Arguments for and against the devolution of Air Passenger Duty to Wales

For several years the Welsh Government has been calling for the devolution of Air Passenger Duty (APD) to Wales, but the UK Government has resisted the change. We therefore decided to launch this inquiry to consider the arguments for and against the devolution of APD to Wales. This report will outline what these main arguments were:


Image: Airplane

Image of an airplane

Source: Pixabay


Arguments for:

  • Recommendations made by two respected commissions, the Silk Commission and the Holtham Commission, suggested that APD should be devolved to Wales. 
  • APD is being devolved to Scotland and has been partially devolved to Northern Ireland, making Wales the only devolved administration with no power over any aspect of APD.
  • The devolution of APD, and subsequent reduction or abolition of the duty, could unlock the potential of Cardiff Airport to attract new airlines and increase passenger numbers to Wales.
  • Cardiff Airport could potentially complement busier airports in England, some of which have plans for expansion because they are nearly at capacity.
  • A reduction in APD could boost the Welsh brand and promote economic growth across the whole of Wales.

Arguments against:

  • Devolution of APD could take business away from English airports serving Wales.
  • Those living in South Wales could see more benefits than those living in Mid and North Wales as it is Cardiff Airport that will be primarily affected.
  • Cardiff Airport already has a competitive advantage because it is under the ownership of the Welsh Government.
  • The aviation industry is relatively under-taxed as airline fuel is not subject to tax and airline tickets are not subject to VAT, domestically or internationally.
  • If APD were devolved to Wales, and subsequently abolished or reduced, there would be an increase in air traffic which in turn could increase carbon emissions and cause damage to the environment.
  • Wales would see a reduction in the amount of funding it receives from the UK Government through the block grant.

Recommendations

After carefully considering all these arguments, we have come to the view that:

  • APD should be devolved to Wales and we call on the UK Government to set out plans to so by 2021.
  • Should APD be devolved to Wales, we have not taken a view on whether APD should be abolished or reduced, as we believe that this a decision for the Welsh Government.
  • However, we do call on the Welsh Government to carry out the necessary environmental impact assessments, before any decision is made on how to use the tax.
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