Air Passenger Duty to be repealed

The new Conservative/Liberal
Democrat coalition governing the United Kingdom has said it will get
rid of the controversial Air Passenger Duty as part of its joint manifesto.

This could affect the cost of
tickets between Cayman and London on British Airways, which is subject to
increased taxes because it flies directly to the Caribbean rather than via North
America, which is taxed at a lower rate under the current system.

The Air Passenger Duty is a
per-passenger tax introduced in 2009 that upped the tax on flights to the Caribbean by between 25 and 87 per cent in 2009 with a
further increase to 94 per cent by November 2010. Calculations suggested that this
meant a family of four would pay nearly $800 in taxes if they travelled in
premium economy.

The taxes are based on how far a
destination capital is from London, meaning flights to North America are based
on the relatively short distance from London to Washington, DC, of 3,675 miles.

London to Los Angeles is 5,456 miles and London to Hawaii
is 7,239 miles. From Nassau to London
is 4,339 miles and George Town, Grand Cayman to London is 4,801 miles.

The Caribbean Tourism Organisation was
happy the matter had been given priority so early in the tenure of the new
British government, and that the government was keeping its pre-election
promise to reform the tax, said spokesman Johnson Johnrose.

“This speaks volumes to us about
the importance that the UK
government has attached to this issue. It also speaks volumes about the
strength of unity of the Caribbean. We made
our voices heard and we did what we felt was necessary to bring attention to
the matter.

“We eagerly await the details of
the new system,” he added.

The new government proposes to
switch to a per-plane duty and said in its manifesto that a proportion of increased
revenues over time would be used to help fund increases in the personal
allowance tax threshold.

It is not yet clear how much duty
would be levied on a per-plane basis. It is estimated that annually, Air Passenger
Duty would bring in over £2.5 billion (CI$3.05 billion) to treasury coffers.

The Association of British Travel
Agents said the passenger tax had been set at a punitive level.

“We have always stated that the
travel industry should be taxed fairly and that a system more closely aligned
to the efficiency of aircraft and distance travelled is the fairest way to
achieve this, and we welcome the Government’s move to adopt a per plane tax,”
said chief executive Mark Tanzer.

Previous Liberal Democrat policy
has been to extend the per-plane duty to air freight and cargo jets and increase
the duty on short-haul domestic flights in the UK, particularly where an
alternative transport method for freight transport could be used. The Tories
said that under the terms of the new coalition all Lib-Dem tax proposals would
be developed in detail. Other proposals on the table include scrapping a
planned third runway at Heathrow.