LIZ CAMERON

For businesses struggling to stay competitive in the far North of Scotland, new powers over the air departure tax promised to level the playing field.

Although Highlands and Islands airports have benefited since 2001 from an exemption from extra taxes due to their poor market connectivity, the introduction under the Scotland Act 2016 of a Holyrood-set Airport Departure Tax, promised to lower the price of the onward flights from Central Belt airports used by most Northern businesses.

For the first time, it seemed, there was a realistic prospect of the geographical penalty paid by remote Scottish businesses being reduced to manageable levels.

Imagine their dismay therefore when the finance minister Derek Mackay announced in the Scottish Parliament on 4 October that “after careful consideration” the Scottish Government felt that the Highlands exemption “has to be notified to and assessed by the European Commission under state-aid rules before it is implemented in compliance with European Union law.”

The existing regime under UK Air Passenger Duty (APD), it was implied, was proving a spanner in the works of the proposed new Scottish Airline Departure Tax (ADT).

The Scottish Government’s repeated pledge to reduce it by 50% by the end of the Parliament therefore looks doubtful, pending Brussels giving the nod to a tax power, wrested from Westminster in the Smith Commission process, being exercised in line with Scotland’s particular economic needs.

Leaving aside the political ironies contained in the timing of this unforeseen EU-related snag, the debate about ADT underlines the depressing fragility of business influence in Scottish political discourse.

Debating and – so it was thought - establishing, the details and benefits of reducing air taxes has already burned up countless hours of precious business and civil service time, through consultations and through the APD Stakeholder Forum which met between Aug 2015 and May 2016. The aim of “improving connectivity to Scottish airports, generating new direct routes and increasing inbound tourism” was seen as central to Scottish Government’s strategy to use its new powers to promote growth inclusive of all parts of the nation.

Now Mr Mackay refers ominously to “a range of views on whether the tax should be reduced”, presumably including the views of those who think flying per se should be discouraged on environmental grounds or, absurdly, that it is a frivolous luxury indulged in by wealthy “frequent fliers” rather than a necessary chore.

Trudy Morris, chief executive of Caithness Chamber of Commerce has written to Mr Mackay voicing her “extreme disappointment” that, after years of discussion around ADT, “zero progress” had been made on the matter of the Highland and Islands exemption, allowing it to be held up as a barrier to a Scotland wide-reduction.

What’s worse, she suggests, is that this playing of the state aid card threatens the existing Highlands and Islands airports exemption, should Brussels discover that it does, after all, contravene its rules.

How this issue is resolved will reveal much about how seriously business input is taken in deliberation around the Scottish Parliament’s new powers.

Liz Cameron is chief executive of Scottish Chambers of Commerce.