Business leaders furious after £150m tax cut is axed

Citing the need to cut carbon emissions to protect the planet, ministers said the policy, a legacy of Alex Salmond’s time as first minister, was “no longer compatible with more ambitious climate targets”.

It was a significant moment for the SNP, which came of age in the early 1970s under the slogan “It’s Scotland’s Oil”, and has made the unstinting use of fossil fuels part of the independence argument.

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There was a furious reaction from the airline industry, which had been anticipating a tax cut that could have boosted flight numbers.

The boss of Edinburgh Airport accused the Government of lacking leadership and leading airlines and airports “down a path of failed promises for three years”.

The Scottish Chambers of Commerce called it “alarming”, adding it would hurt the economy and accused ministers of “abandoning their long-term commitment to Scotland’s business community”.

The Tories said the SNP had caved in to “environmental extremists” in the Yes movement, a reference to the Green MSPs who help Ms Sturgeon’s minority administration pass its budgets.

But Friends of the Earth Scotland director Dr Richard Dixon said it was “excellent news”, adding: “Clearly, the next logical step is to start mapping the phase out of the North Sea oil industry.”

Announcing the move, the Scottish Government said all relevant policies would now be re-assessed to ensure they were aligned with the drive to fight climate change.

The Government also urged the opposition parties at Holyrood to embrace its other environmental plans, notably the workplace parking levy intended to cut road congestion and air pollution.

At the 2016 Holyrood election, the SNP promised a 50 per cent cut in Air Departure Tax (ADT), the proposed devolved version of Air Passenger Duty, by 2021.

The party’s long-term goal was to abolish it entirely, at a cost of £300m a year. Proposed by Mr Salmond in 2011, but maintained by Ms Sturgeon, the policy was meant to boost the economy by increasing flights in and out of Scotland.

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The standard tax rate is currently £26 for passengers on short-haul flights and £172 for those on long-haul flights.

But critics warned a cut would add to carbon emissions and damage the climate.

After Ms Sturgeon declared a “climate emergency” at the SNP conference, her ADT plan immediately came under renewed scrutiny. Labour tabled a vote at Holyrood for today calling for the ADT cut to be abandoned for the sake of the climate.

As the LibDems and Greens agree with ending the policy, the vote could have forced the SNP to side with Tories, an uncomfortable place for Ms Sturgeon.

Instead, after the First Minister led a Cabinet discussion on the vote and the policy yesterday, the Government ditched the tax break.

Besides the environmental concerns, the policy was also facing technical problems, making it easier to abandon.

Already delayed three times, the devolution of ADT has been tripped up by an air duty exemption granted to Highlands and Islands airports in 2001.

If the tax is devolved, this could disappear because of EU state aid rules.

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Finance Secretary Derek Mackay said: “All parts of government and society have a contribution to make to meeting this challenge – and reducing Air Departure Tax is no longer compatible with more ambitious climate targets.

“The fact is the Scottish Parliament has never been able to use powers over aviation tax, given the UK Government failed to devolve them in a fit state.

“Labour have consistently played politics with the proposed Workplace Parking Levy, teaming up with the Tories to spread scare stories to try and gain votes – but if they are serious about taking action to tackle climate change they will step up, drop their opposition and back wider action to reduce emissions.”

Liz Cameron, director of the Scottish Chambers of Commerce, was scathing.

She said: “This decision will have a significant and deleterious impact on the economy. It will do nothing to reduce emissions. Instead, it will cut Scotland off at the knees in terms of connectivity and a competitive playing field.

“Without world-class transport connections, Scotland’s efforts to trade internationally will be hampered at a critical point where the need to boost our exports has never been greater.”

Edinburgh Airport boss Gordon Dewar said: “It is wrong to single out one industry and land the blame on our tarmac. It not only punishes families and those who work hard to afford a holiday, but will restrict our future connectivity, investment into Scotland and job creation as we sacrifice Scotland’s international outlook.”

Tory MSP Murdo Fraser said: “Cutting ADT on long-haul flights has huge potential to boost our economy, make money for the tourism industry, and generate business. It’s a disgrace the SNP no longer sees these as important.”

Labour’s Colin Smyth said: “This U-turn from the SNP is thanks to pressure from Labour, and is one that should have been made years ago. A tax cut that benefits the richest the most and increases emissions was never right.”

Green MSP Patrick Harvie said: “We led the case against this ill-thought-out tax giveaway, so we very much welcome the Scottish Government’s huge U-turn.”