APD reform a good decision

Friday, March 21, 2014    

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WE welcome the decision by the British Government to reform its Air Passenger Duty (APD) which was the subject of great controversy ever since the rates were increased in April 2012.

Under the new regime, the current four-band system — A, B, C, & D — will be reduced to two bands — A & B. This means that the Caribbean will be placed in the same band — B — as the United States, a move that will result in people travelling from the United Kingdom to the Caribbean paying the same tax as those travelling to the USA.

As we reported in yesterday's edition, the APD reform will ensure that the duty on flights between the Caribbean and the UK will not increase to the proposed US$140 per person, economy class, which would have amounted to a 70 per cent, or US$58, increase in the duty.

Our main concern, at this time, is that this reform will take effect in April 2015, meaning that people travelling to the Caribbean from the UK between now and then will be subjected to this heavy tax.

We had hoped that London would have seen the wisdom of reforming the APD in a much shorter time. For, as Mr George Osborne, the UK's chancellor of the exchequer, pointed out in his budget speech on Wednesday, abolishing bands C and D will help British businesses strengthen links with "high-growth markets", thus making the UK "an attractive option for business visitors and tourists".

Probably it's the paperwork involved in reforming the tax that requires such a long lead time. In any event, as stated earlier, we are happy that the British Government has recognised that the way the APD was structured was unfair to the Caribbean — a region that has a long history with England and which has been an unwavering partner over many years.

London, it appears, was swayed by UK Government statistics that confirmed that Caribbean destinations are suffering from below-average arrivals from the UK, compared to the US and Canada, due to the discrepancy in the tariff.

That is a point that we have made repeatedly in this space, starting from as far back as March 2012 when we pointed to the position held by the World Travel and Tourism Council (WTTC).

At the time, we quoted WTTC President David Scowsill as saying that the APD "is a completely disproportionate tax on people's holidays" and that it was a hard blow to business travel.

Mr Scowsill went further, stating: "This tax is damaging the economy at a crucial time and is having a negative effect on trade with countries in the Caribbean, Africa and Asia."

Mr Scowsill's comments were informed by research which showed that removing the APD would result in the creation of 91,000 jobs in England and the addition of £4.2 billion to the British economy within a year.

It was significant that some of the world's leading airlines — British Airways, EasyJet, Ryanair, and Virgin Atlantic — all voiced support for the WTTC's position, which reflected the views of the Caribbean

on this issue.

The Caribbean officials, as well as the airlines and the WTTC should be commended for their continued lobby against the APD.

The region should now move to maximise the benefits that will flow from the reform.





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