CARIBBEAN CALLS FOR NEW APD BANDSWednesday 10th November 2010
A detailed analysis of how the controversial Air Passenger Duty (APD) tax is affecting Caribbean economies and recommendations for change has been presented to the British Government by the Chairman of the Caribbean Tourism Organisation (CTO), Senator the Hon Ricky Skerritt, the Minister of Tourism of St Kitts-Nevis.
The APD report, The Impact of Air Passenger Duty and Possible Alternatives for the Caribbean” has been compiled by the CTO at the request of the British Treasury in follow up to a delegation of six Caribbean tourism ministers who visited London in September. Ministers from Antigua and Barbuda, Barbados, Grenada, Jamaica, St Kitts and Nevis and St Lucia met with British Ministers at that time to protest against the tax that has been described as “a disgrace” by BA chairman Willie Walsh.
The report highlights the negative impact on Caribbean tourism and proposes a new approach to the banding structure, that would divide the world into two zones, creating a more equitable relationship between the distance travelled and the taxation of emissions.
Minister Skerritt said: “the APD tax is clearly a barrier to travel and tourism. and we are not happy about any aspect of it. However, during our visit in September the British Government asked us to provide evidence of the impact of this tax on our tourism and to suggest an alternative approach. which would be revenue neutral. Our report clearly demonstrates that British visitors to the Caribbean from the UK are declining, while those from other countries have been increasing. The UK is the only major source market to have registered a decline in visitors to the region in the first quarter of 2010. We then looked at alternatives to the current tax bands and were shocked to realise how unbalanced the current banding system has become.
“This tax is discriminating against long-haul travel. It’s also hugely unfair because it penalises destinations where there is no alternative to aviation travel. If you tax flights to France from the UK, passengers can choose to reach their destination by ferry, car or rail. The Caribbean doesn’t have that luxury. The tax is damaging thousands of people’s livelihoods in countries around the world and the British Government needs to do something immediately. We’re now urging them to consider a simple rebanding of the whole process,” the CTO chairman said:
Hugh Riley, secretary general and CEO of the Caribbean Tourism Organisation, said, “Many countries around the world are now concerned about the impact of such heavy taxation on tourism which generates such economic benefit. We are proposing a revenue neutral way to change the tax bands so the British government can still collect revenues but not at the sake of damaging many fragile and tourism dependent countries around the world.”
The Caribbean Tourism Organisation’s recommended alternative would be simple two-tier tax band with each band structured so that tax is charged in proportion to its Co2 impact. This would mean taxing short-haul flights in coach by an additional pound and in other classes by slightly more.
The CTO report, which has been sent to the ministries of tourism, the treasury and transportation, highlights that if HMRC Jan –March 2010 figures are used as a sample, if all economy destinations from bands C to D were moved into band B, the lost revenue would be £11.44 million, using 1 November APD rates. However by increasing the APD economy rate for band A by just £1 the increased revenue for band A economy short haul travellers would be £14.22 million.
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