---

Scotland Bill

I shall answer that when I come to air passenger duty, because it is a perfectly valid question. In general terms, if any Government chose to increase a tax they would see an increase in yield or behavioural change. Likewise, if they chose to decrease a tax they would either see a reduction in yield or behavioural change. In the case of corporation tax, all the evidence in country after country shows that when business taxes have come down, business tax yield has increased. Those judgments would need to be made depending on the tax, the decision and the part of the economic cycle. Let me carry on with aggregates tax before I get back to air passenger duty. Calman went on to describe the aggregates levy as"““a tax on the commercial extraction in the UK of rock, sand and gravel. Anyone who is responsible for commercially exploiting aggregate in the UK is liable, and the levy is based on weight””—" somewhere under £2 a tonne, and it"““came into effect in 2002, and was introduced to address, by taxation, the environmental costs associated with quarrying operations (noise, dust, visual intrusion””—" and so on. He went on:"““It is also intended to reduce demand for aggregate and encourage the use of alternative materials where possible.””" Those were sensible policy objectives. Calman said:"““The levy is usually applied to quarry operators, but it can be shifted to customers or users of the aggregate—the key distinction being where it is commercially exploited. The Aggregates Levy also applies to aggregates drawn from the seabed in UK territorial waters and to imports.""At the time of its introduction, it was envisaged that the Aggregates Levy would not represent a gain to the UK Exchequer because it would be offset by a 0.1% reduction to employer NICs and payments to devolved Aggregates Levy Sustainability Funds.””" A number of concessions to the levy already apply in Northern Ireland, so it could sensibly be argued that it already operates differently within different parts of the UK, which makes it much more bizarre that it is not being devolved at this time. Like landfill tax, the aggregates levy clearly accesses what is known as an immobile tax base—quarries tend not to move—hence the commission believed that it would be suitable for devolution. The SNP agrees and that is a firm recommendation of the Scottish Parliament Committee that considered this matter. Calman described air passenger duty in a similar manner. He said that it was"““an excise duty which is charged on the carriage, from a UK airport, of chargeable passengers on chargeable aircraft. It is paid by the aircraft operator…Presently, there are four rates of duty, depending on the destination of the flight and the class of travel””" starting at £10. He went on:"““The 2008 Pre-Budget Report announced reforms…from a two-distance band regime to a four-distance band regime, set at 2,000 mile intervals from London””" to the capitals of other countries. It"““is not payable on flights departing from airports in the Scottish Highlands and Islands””," which of course means that it is already functioning differently in one part of the UK from the rest, just like the aggregates levy, but:"““Flights from other areas of the UK to airports in this region are liable.””" In 2006-07, that brought in about £94 million—quite a limited amount. Calman went on:"““Assuming the devolution, and thus the potential application of different rates in Scotland than elsewhere…did not conflict with EU law, we think the devolution of APD would not be associated with administrative or economic inefficiencies and is therefore potentially achievable.””" The SNP agrees entirely. The argument against that is that the Government have APD under review and would not devolve it at the present time, and the Scottish Parliament Committee broadly shares that view and has recommended that it is devolved after the Government have completed their review. On the Scottish National party Benches, we prefer the opinion of Professor McLean, who said that"““the fact that the UK government intends to convert air passenger duty into a 'per plane' duty argues for, not against, devolving it.””" Our amendments and the new clauses associated with them lay out the mechanism to complete that devolution. They are very simple amendments and follow the process set out in schedule 7 to the Scotland Act 1998—