It was expected to be a low key affair but, for Northern Ireland, confirmation that the Government is to examine the impact of air passenger duty (APD) on the province made the Spring Statement a significant event.
Released in papers accompanying the Chancellors’s statement, The Treasury said Government wanted “to support the economy in Northern Ireland, and to help build on the growing success of the tourism industry there”.
It said concerns had been raised about the impact of VAT and APD on tourism in the UK and Northern Ireland in particular, adding that views on the potential costs and benefits of any changes differed greatly.
“The government is therefore seeking evidence that demonstrates the significance of any impacts that VAT and/or APD have on tourism, or that helps show how VAT and/or APD might be used to support the growing success of the sector in Northern Ireland.”
The news after many years of lobbying and protest from many quarters was greeted by groups such as Hospitality Ulster
“This is a welcome announcement from Treasury and it is the first time that they have carried out such research into the impact of a cut in both APD and tourism VAT for Northern Ireland,” said CEO Colin Neill.
“Hospitality Ulster has led on the campaign for a cut in both of these key taxes.
“We currently have a 20% tourism VAT rate, which puts us at a distinct disadvantage to our nearest competitor and market, the Republic of Ireland, which has a 9% rate,” he added.
“Despite that unfair disadvantage, which could be rectified in the morning, the Northern Ireland hospitality sector continued to grow in 2017.”
The industry, he noted, currently contributes £1.1 billion to the NI economy annually and supports 60,000 jobs.
“Imagine how much more we could grow if the tourism VAT rate was cut to meet or beat the Republic’s rate.
“Indeed, independent research conducted in 2017 showed that if the VAT rate on accommodation and visitor attractions was cut to 5%, more than 2,000 jobs would be created in our hospitality sector, with 4,000 more created if VAT was cut on food.”
In a statement, Belfast International Airport said it would set out “the strongest possible case” for the removal of APD in its submission to the process.
“We now have a golden opportunity to convince the Government of the uniquely challenging burden which the continued application of APD creates in Northern Ireland,” said managing director Graham Keddie.
“This tax makes us less able to compete on a level playing field with the Republic of Ireland where passenger tax was very deliberately consigned to the bin to reap dividends from the continued application of this onerous tax ‘up the road’ in Northern Ireland.”
Any loss of revenue would be more than covered by the pick up in business.
“We say with confidence that the millions that would flow into HM Treasury coffers as a result of increased personal taxation from thousands of additional new jobs would easily surpass the sum raised by APD.
“Airlines have already told us that if the Government removed the burden of APD, they would invest massively in Northern Ireland with more based aircraft and a plethora of new mainland European destinations.
“The transformation for our entire tourism sector and its positive impact on the local economy would be immense.”