Friday 10 November 2017

Confusing ends and means

As an independentista, I am of course wholly supportive of devolving more tax powers – indeed, all tax powers – from London to Cardiff.  I don’t really need anyone to make the argument separately for any individual tax.  But the argument being made earlier this week for devolution of long-haul air passenger duty (APD) isn’t an argument about devolution at all; it’s an argument for abolition of the tax for certain airports.  Devolving the tax is presented as being simply a means to an end.
The core of the argument is that abolition of the tax would enable Cardiff to compete more effectively with other UK airports, and to expand the number of flights and destinations.  I’m not at all convinced that those are worthy objectives, and I’m conscious that the original objective of APD was, if not exactly to deter people from flying, then at least to make sure that the cost of doing so covered at least some of the environmental cost, particularly in a context where fuel for road traffic is heavily taxed and aviation fuel is not.  Whether APD is effective in that respect, or whether that aim is better achieved in another way is an issue on which I’m open to persuasion; but simple abolition with no replacement policy looks like a backward step to me.  However, I’d still support the devolution of that tax power, even if I were convinced that any conceivable government in Cardiff were likely to use it in a way which I don’t like.
That goes to the heart of my concern about the argument being put forward by those running Cardiff Airport.  Choosing where to place power over a particular tax on the basis of who is most likely to use that power in the way that a particular interest group wants looks to me like encouraging a ‘race to the bottom’.  It puts different tax authorities in a position of competing to see who can offer the lowest taxation regime.  That doesn’t look like a sound basis for deciding who should wield the power.


Spirit of BME said...

Interesting post, but if you are trying to earn an honest crust in running Cardiff airport, it just falls somewhat short of the daily problem of putting bread on their table.
HM Treasury when planning taxes focus on where the volume resides and that does not include Wales, so there is no basic tax that is be-spoke to cover Welsh interests and devolving the powers would sort that out, including the power to cancel taxes.
Back to Cardiff airport, this is an economic basket case as it always will be, it was designed as a military airport not a civil one, it`s simply in the wrong place.
Airports make their living by passenger/aircraft movement volume, if they do not reach a critical mass they are not able to raise rents and airlines expect them to pay for their costs of operating there -Ryanair/EasyJet have built their business success on this model.
HMG in Wales decided “overnight”, supported by Plaid to put £50million of taxpayer’s money into this airport in order to keep it afloat and millions more have followed, the call to cancel APD will do very little apart from putting back a few months a further call on the taxpayer to put more money into this sinkhole and that is the real tax issue with this airport.

Jonathan said...

"You can't be a real country unless you have a beer and an airline. It helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer.- Frank Zappa
Agree or disagree?
We've got beer (Evan Evans, not Brains) We've got more than kind of a football team. No nuclear weapons (but only because we're small. But we'd kind of have them if we join the co=op and were independent within NATO.)
Oh yes, an airline.
I run my orchard on green principles. No chemicals. Surplus wood get harvested, burnt on the fire in winter. Wood ash goes on roots of apple trees.. Apples go to Gethin for cider down the road.But I would struggle to run Wales on green principle. Small "g" anyway. Here's why.
I travel to N.Carolina a lot from Wales. With Aer Lingus usually.On principle because its the nearest thing to a Welsh Airline. Hop on the (too infrequent) flight from Cardiff to Dublin and ....WOW!. Flights to all over the USA, big Green airliners, mil failte and Irish films with all the others on the in-flight entertainment. And (queue-less) US clearance. And Aer Lingus have sub-airlines and a whole other Terminal. And Aer Lingus spawned Ryan Air and fly all over Europe as well and Irish talent seems to run most of the world's airlines.
Weep, Wales. These are my ("Weariin' o' the) Green principles with a capital "G".
Is Ireland bigger than Wales? Does it have 20m geniuses or something? No, we are both under 5m.
What would Wales give to have Dublin Airport and Aer Lingus? We could have. We nearly did, except that Air Wales and Cambrian Airways were smothered in infancy in the UK.
And now we seem to disagree about having an airline because of the environment. I do see this is tricky.
But I come down on the side of confidence, energy and being smart. I know the air-travel industry can be commodified, brassy even cheesey, cheapskate and frothy with endless flights to Ibiza or Disney. But my goodness its dynamic, and opens our paths to the world.
I'm not saying its impossible to base a rough, tough, dynamic and lucky money-spinning economy on making wind-turbine blades, roof-insulation and solar panels. Good if Wales could get this lucky.
But as well as feeling rough, tough, dynamic in Wales - honestly now - do we feel lucky?

John Dixon said...

This really was a post about how to decide which taxes should be decided where rather than about airports. I tend to agree with Spirit's pessimism about the future of Cardiff airport; I suspect that it's doomed to slow growth serving mainly the package holiday industry. The idea that it can primarily a centre for scheduled flights to world-wide destinations looks very fanciful to me - why on earth would sufficient numbers of people to justify that want to fly to Cardiff?

The whole thing seems to be based on the sort of view expressed by Jonathan, that we cannot be a nation without our own major international airport. Why not? And how much are we prepared to lose by trying to fill a non-existent gap largely for status reasons?

G Horton-Jones said...

Living out west. I love Cardiff Airport One hour 54 minutes to the long term parking and 5 minutes max to the check in. Yes we could do with a dedicated railway feed which Google Earth tells me is distinctly possible and Yes the link from Culverhouse Cross to the Airport could be improved with a roundabout cull. and Yes Independence would give us control over destinations and our own airspace and much much more

You forget
The freight capacity of this airport
Its potential for military and humanitarian flights
If I dont find a two hour drive a problem what does this tell you about the potential customer base of the Airport

Sorry John on this one you are just wrong we need to look at the bigger picture if Wales is to move forward

John Dixon said...

We are again straying from the point here. I also use Cardiff Airport when I can, and agree that a dedicated rail link would be an improvement. And perhaps I'll come back to the question of the airport, rather than debate it in comments under a post on taxation. But in the meantime:

1. Cardiff Airport can never sensibly serve the whole of Wales; geography makes it an airport for the south and midlands of Wales only,
2. The freight capacity is valuable only if there's a market for it,
3. The same applies to any military/ humanitarian role,
4. If a two hour journey to an airport isn't a problem (and I actually agree with that), then most of Wales (in population terms, if not in geographical terms) is within a two hour journey of an alternative UK airport.

Independence only gives us control over destinations if a) there is a market for flights to those destinations, or b) we are prepared to subsidise flights.

I agree that we need to look at the bigger picture, but that includes taking a realistic view of what is possible, and on what terms.