No changes to NI air passenger duty or tourism tax

By John Campbell
BBC News NI Economics & Business Editor

Image caption,
Campaigners have called for cuts to air passenger duty and tourism taxes in Northern Ireland

The government has said it will not be making any changes to Air Passenger Duty (APD) or tourism VAT in Northern Ireland "at this time".

There have been long running campaigns to cut both taxes.

The government's response has been published alongside the budget and said that for legal reasons no changes can be made until the UK has left the EU.

Instead APD will be further examined by a "technical working group" while VAT will remain "under review".

Image source, Derry City Airport
Image caption,
In August 2017 airport chiefs have asked for the review of air passenger tax to be "initiated, completed and the result implemented as soon as possible"

The government also suggests that "level playing field" provisions in any eventual deal with the EU may limit any changes to the taxes in Northern Ireland.

It states: "In the future, the government is committed to continuing the control of anti-competitive subsidies by creating a UK-wide subsidy control framework.

"This would include a commitment to maintain a common rulebook with the EU on state aid, enforced by the Competition and Markets Authority."

The government does concede that there "may be scope" to make VAT changes in the future but cautions that it is "a complex area affecting important sources of revenue for the Exchequer which requires further exploration".

Image caption,
New hotels - including the Titanic Hotel - have added 1,000 more rooms in Belfast

The government also takes a sceptical approach to the tourism VAT cut which was introduced in the Republic of Ireland during the economic downturn.

A special low rate of 9% was introduced in 2011 as a temporary measure to help the industry in the depths of a recession.

However, the government says the upsurge in the tourism industry there has "reflected, to some extent, global economic recovery and that of Ireland".