A body examining new powers for the Scottish Parliament is today expected to recommend that control over Air Passenger Duty (APD) is devolved.
The Smith Commission, a cross-party group led by Lord Smith of Kelvin, is publishing its so-called heads of agreement in Edinburgh tomorrow morning.
The move would be a victory for Scottish Government ministers and Aberdeen International Airport managing director Carol Benzie who claim the tax constrains economic growth.
The government wants to cut the rate by 50% before abolishing it altogether.
Bosses at Aberdeen, Glasgow and Edinburgh airports argue abolition of the charge – described as the highest air passenger tax in the world – would pay for itself and bring about “real and swift” economic benefits.
A report commissioned by the airports said reducing APD would incentivise more direct travel from Scotland and reduce the need to transfer through European airports to avoid paying the tax.
It warned that by 2016 APD would cost the economy up to £210million in lost tourism spend a year.
Paul Simmons, Flybe’s chief commercial officer, has claimed it was an “unfair” tax because it was not related to the distance people travelled.
The UK Government has warned it would cost £130million to reduce APD.
A source close the Smith Commission, set up by David Cameron to deliver on the pre-referendum vow by pro-union parties to guarantee more powers for Scotland, said it had agreed that all income tax powers should be devolved and the Barnett funding formula should be maintained.
They added that substantial responsibility for welfare had been recommended for transfer to Holyrood.
“There has been a lot of give and take to reach consensus and parties have not got everything they wanted,” the source said.
A single package agreement has to be reached by November 30, with draft legislation produced by the end of January.
This will then be implemented by whatever party wins next year’s general election.
The Scottish Government had asked for full responsibility for all taxes to be transferred, including powers over national insurance, corporation tax, capital gains tax, fuel duty and inheritance tax.