The United Kingdom is under pressure to scrap its unpopular travel tax after a new report claimed abolishing the air passenger duty would provide a shot-in-the-arm for the country’s struggling economy.
The move would have a major knock-on benefit for the Caribbean, potentially slashing the cost of flights from London to the Cayman Islands by roughly $400 for a family of four.
Authorities here have long campaigned against the tariff, which they say is driving up the cost of travel to the region and hurting the tourism industry.
The new PricewaterhouseCoopers study, commissioned by the UK’s four major airlines, suggests scrapping the tax would help create 60,000 jobs and provide a lasting boost to the British economy.
Willie Walsh, chief executive officer of British Airways’ parent company, IAG, urged the UK’s Chancellor of the Exchequer George Osborne to heed the report and get rid of the tax at the next budget.
He said: “Should APD be abolished, the aviation industry would be able to move quickly to add new flights in and out of the UK or invest in new products and services, creating new opportunities for businesses and much needed jobs across the UK.”
Jane van der Bol, executive director of the Cayman Islands Tourism Association, said the organisation would be monitoring developments closely. She said: “It would be very welcome if this actually came to fruition. This tax is certainly a burden. It costs around $150 more than it used to, to fly here from the UK. When you multiply that by four or five times for a family holiday, it is a considerable extra cost.”
At the moment, British tourists provide just a small fraction of visitors to the Cayman Islands.
Of the 321,650 visitors arriving by plane in 2012 only 13,390 came from the UK.
Ms van der Bol said cost was one of the biggest barriers to increasing those numbers.
Meanwhile, Caribbean tourism officials have said they hope the report would prompt a change of heart over the unpopular tax from UK finance chiefs.
They say it has unfairly impacted the Caribbean, which is bracketed in the top tax band. British holidaymakers actually pay less tax to travel to far flung American destinations such as Hawaii and San Francisco than they would to fly to Cayman or Barbados because of the way the tax is structured.
In a joint statement Richard Doumeng, president of the Caribbean Hotel & Tourism Association and Beverly Nicholson-Doty, chairman of the Caribbean Tourism Organization, said they hoped the PwC report would prove to be a turning point in the debate over APD.
“For the Caribbean, the tax is extra-territorial in effect, and is damaging the region’s tourism economy,” a statement read. “For this reason, the region has argued that at the very least the discriminatory aspect of the tax, which favours the US, should be addressed by re-banding the Caribbean to the same level as the US.
“The British government, up to now, has resisted all attempts to seek the abolition of APD, or make any change to the unjust manner in which the Caribbean has been treated, arguing that APD is a necessary revenue raising measure,” the statement continued. “We would hope that the UK chancellor studies carefully the PwC report and recognises that APD is damaging the UK travel and tourism industry and by extension the vulnerable economies of the Caribbean, the most tourism dependent region in the world.
“Up to now, despite the weight of UK Parliamentary support for the Caribbean and for the UK industry, the chancellor has chosen to ignore the evidence that suggests the tax is counterproductive,” the statement read. “Let us hope that this is the moment when he takes note of figures independently produced that indicate that APD is hugely damaging and its abolition could create growth.”