Tourism group supports tax change

The Caribbean Hotel and Tourism Association has said that it fully supports a recent letter sent to the United Kingdom government about the “unfair” Air Passenger Duty. 

Because the Caribbean is in one of the top tax bands, levied on flights to and from the UK, these costs have been passed on to travellers in the form of increased air fares, which the tourism industry has long said is having a negative effect on inbound numbers. 

CARICOM Chairman Dr. Kenny Anthony, prime minister of St. Lucia, initially wrote to British Chancellor of the Exchequer George Osborne about the detrimental effects the UK’s Air Passenger Duty has on the entire Caribbean, the most tourism dependent region in the world. 

“The Caribbean understands the fiscal challenge faced by the UK in respect of raising revenue, but we do not believe that Air Passenger Duty should be imposed unfairly, or at the expense of the Caribbean economy and our community in the UK,” Mr. Anthony wrote. 

“Our data shows the negative effect that the duty is having in this respect and how it has hampered our ability to obtain the greatest benefit from our most valuable export industry. It also has a significant financial impact on the UK companies, large and small, with which we partner and for whom the Caribbean has been a major market.” 

 

Serious issue 

Richard J. Doumeng, president of the Caribbean Hotel and Tourism Association, said that the fact that the prime minister, who is also the chairman of CARICOM, has written to the UK government on this issue “demonstrates the seriousness with which the Caribbean region takes this issue and the severe impact that the duty is having on the Caribbean”.  

“Air Passenger Duty is a significant threat to the sustainability and growth of Caribbean tourism. The Caribbean Hotel and Tourism Association, along with its partners in the Caribbean Tourism Organization, has consistently campaigned against [the tax] on behalf of its members and all of those who depend on tourism.  

“[The association] passed a resolution in January 2012 calling on Caribbean governments to engage with the UK treasury on this issue and we are delighted that this is now happening. We stand ready to provide support to Caribbean governments as they seek to have the Caribbean’s concerns addressed.” 

The resolution in question requested that “in view of the proven and ongoing negative economic impact on the UK visitor arrivals to the Caribbean, the second largest originating visitor market to the Caribbean, that the governments of the Caribbean initiate with immediate effect all necessary steps to have the Air Passenger Duty banding issue addressed with the UK government at the highest level making clear that [it] is damaging the Caribbean tourism economy and the once positive relationship between the UK and the region.”  

It further called on the governments of the Caribbean “to make clear that the UK banding structure contravenes the spirit of the EU CARIFORUM Economic Partnership Agreement, to which the UK as an EU member is a signatory. It additionally called on governments to review alternative options to address the issue including the bringing of a complaint at the World Trade Organization under the General Agreement on Trade in Services based on the discriminatory nature of the [duty’s] banding system against the Caribbean, and other inequities contained within the UK’s Air Passenger Duty system that may exist.” 

 

Reports published 

The World Travel and Tourism Council published a report in May confirming the significant value of travel and tourism to jobs and growth in the UK and the damaging effect of Air Passenger Duty to the industry. According to reports by the Caribbean Tourism Organization, the UK visitor market to the Caribbean in 2007 was at 1,373,600 and in 2010 had declined to 1,103,400, a decrease of 270,200 visitors representing a major economic loss. 

Since 2008, the Caribbean and its community in the UK have consistently sought to raise the issue of Air Passenger Duty at all levels of the British government and with the UK Parliament making clear that, in the words of the association, “the Caribbean requires parity in banding with the US and that Air Passenger Duty is a political issue for the Caribbean and the Caribbean Diaspora in the UK”. 

Kenny Anthony

Dr. Anthony

1 COMMENT

  1. If this is such a problem, then why did CI just increase the duty? or is the real position that we do not want the UK to have increased the tax, so that we can?

  2. The Caymanian departure tax must be modified as well. After being hit with the largest departure tax I know,* tourists don’t want to come back. *(Maybe some countries have higher departure taxes but I’m not aware of it.)

  3. I have always wondered why it costs so much more to fly to Cayman from various cities than it does to fly to Jamaica — even though it was right next door. In many cases, it is 50% more. Is it because of the taxes duties — or airlines figure that people going to Cayman have more money. Either way, Cayman loses a lot of tourism dollars because tourists cannot justify the significantly higher airfare if they just want to go on a holiday to a southern, warm location with beaches.

  4. Regarding the cost for short flights … no matter the distance there are fixed costs associated with labour, fuel, landing and taking off, ground support etc. etc. if the flight is longer there are more miles to spread the costs across when the flight is shorter those SAME fixed costs have fewer miles to be spread across. Basic economics … fixed costs are just that, fixed costs … the distance of the flight does not matter.

  5. Tourism: I believe fuel would be a variable cost to airlines. The more miles you fly, the more fuel you use. It’s not ecnomics, it’s cost accounting.

    I do understand where you are coming from, however, in that there are certain costs that the airline incurs no matter the distance travelled potentially increasing fares over shorter distances.

    I just think that there’s more to why the prices of tickets to Cayman are as high as they are. You would have to look into the numbers to see the real story, economic principles like you suggested and government regulations.

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