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New Caricom chairman makes case for removal of APD

Friday, July 13, 2012    

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CASTRIES, St Lucia (CMC) — Caribbean Community (Caricom) chairman Dr Kenny Anthony has written to the British Chancellor of the Exchequer George Osborne on the "deleterious effect" the controversial United Kingdom Air Passenger Duty (APD) tax is continuing to have on Caribbean economies.

The World Travel and Tourism Council (WTTC) said that new research shows that removing the APD would result in an additional 91,000 British jobs being created and £4.2 billion (US$6.5 billion) added to the economy within a year.

The APD, instituted in 1994, is a British environmental tax aimed at offsetting aviation's carbon footprint. In its initial stage, it was set at £5 (US$7.85) per person.

Regional governments have been lobbying London to remove the tax, which they said negatively affect the growth of the tourism industry since the Caribbean has been placed in a band that makes travel to the region much more expensive than travelling from London to the United States.

In his letter, Anthony reminded Osborne that Caribbean leaders have raised the matter on several occasions, and have also discussed its negative impact with Prime Minister David Cameron and Foreign Secretary William Hague.

"The Caribbean understands the fiscal challenge faced by the UK in respect of raising revenue, but we do not believe that APD should be imposed unfairly, or at the expense of the Caribbean economy and our community in the UK.

"The Caribbean is the most tourism-dependent region of the world. The industry, as Prime Minister Cameron himself has acknowledged, is developmental and should be contributing to growth at a time of economic difficulty.

"Our data shows the negative effect that APD is having in this respect and hampers 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," Anthony wrote, adding that "it is also hurting our sizeable Caribbean community living in the United Kingdom".

Citing the case of his own country, St Lucia, Prime Minister Anthony said that "visitor arrivals from the UK declined every year for the past three years".

He said in 2010, tourist arrivals fell 19.4 per cent below the 2008 level and in 2011 registered 14.4 per cent less compared to 2008.

"This decline in arrivals is exacerbated by a further reduction in on-island expenditure as the tax has had a negative impact on traveller's budget, resulting in reduced economic benefit to the country.

"Indications are that tourism receipts associated with these declining numbers in the last three years have fallen on average more than 25 per cent below the 2008 level."

Anthony, who has taken over the chairmanship of the 15-member regional trade bloc at the end of the Caricom summit here last weekend, informed the British government minister that regional governments "remain committed to pursuing a positive dialogue with you and your Government about alternative, revenue-neutral solutions that could address the discriminatory aspect of the current banding system by having the Caribbean and the USA placed in the same lower band".

He told Osborne that he is hopeful that the issue "can still be resolved amicably".

Earlier this year, a number of leading international airlines, including British Airways, EasyJet, Ryanair and Virgin Atlantic urged Osborne to suspend the planned APD pending the outcome of an independent study of the economic effects of such a tax rise.

The airlines said that the eight per cent increase introduced in April would reduce passenger numbers and hinder the UK's economic recovery.

They said that as a result of the increase, a family of four flying from the UK to the Caribbean would have to pay close to £400 (US$625.08) in taxes. In 2005 such a family would have paid a total of £80 (US$125.06) in taxes.

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