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CARICOM exec calls UK tax discriminatory

During the first ever Caribbean Tourism Summit held in Europe, CARICOM Secretary General Lolita Applewhaite laid out the region’s case against the United Kingdom’s(UK)’s Air Passenger Duty(APD)on outgoing flights, and other increases in aviation taxation.

“We view the APD as discriminatory against Caribbean destinations and Caribbean people living in the United Kingdom seeking to travel to the region,”Applewhaite said in her address to summit delegates in Brussels, Belgium yesterday.

Applewhaite said that she viewed aviation taxes as a tax on the development of the region, due to the significance of tourism to Caribbean economies and the fact that aviation is the only practical way for Europeans to access these markets.

Looking forward, however, the secretary general said this revenue raiser for the UK may only be the beginning of moves that disadvantage the Caribbean.

“It is clear, however, that even if the particular problems that the Caribbean is seeking to have addressed in relation to the UK APD are resolved, this tax could be only the tip of the iceberg that may eventually come to include all aviation and maritime transport,”Applewhaite said.”Similar unilateral measures have also been introduced by other countries in Europe.”

The European Union’s(EU)decision to bring aviation into the Emissions Trading Scheme(ETS), to be imposed from 2012, is another troubling concern, according to Applewhaite. She called the EU’s decision to add aviation to the ETS before a global approach was agreed”unfortunate.”

“Aviation and sea transport were not included in the Kyoto Protocol on Climate Change due to difficulties in assigning emissions to any specific country,”Applewhaite said.”At the 37th ICAO Assembly held in Montreal, Canada last year there was general consensus on the need for a multilateral approach once general principles had been agreed on the implementation of market-based measures for international aviation.”

Applewhaite said that according to international rating agency Standard and Poor’s, passengers could face a rise in airfares of up to 40 euros per ticket once aviation is included in the ETS. She acknowledged that the way airlines dealt with the additional cost would impact how much passengers ultimately must bear, but also said the amount assumes that the cost of carbon, currently traded on international markets, remains relatively low.

The CARICOM executive highlighted the vulnerability of the Caribbean region to climate change, and called for a multilateral approach which did not disadvantage a particular mode of transportation and was development oriented.

The UK’s APD is imposed on all passengers departing airports in the UK, and according to a Bahamas Ministry of Tourism release accounted for 1.9 billion pounds in revenue for the UK in 2009/2010. The APD was introduced in 1994 as a”green tax”, and was initially expected to decrease the impact of aviation on the environment. According to the Ministry of Tourism statement, however, there has been no indication as to how those billions were applied.

The 1994 iteration of the APD taxed passengers based on whether they were traveling to European or non-European destinations. Under the first iteration of the APD, passengers to The Bahamas, the Caribbean, Florida or Hawaii, for example, all paid 40 pounds in APD.

However, in April 2009 the UK’s Labour government changed the APD, creating four tiers based on how far a country’s capital city was from London. The result was that travelers departing UK airports to Miami or Hawaii paid an APD of 60 pounds for an economy fare, while a visit to Nassau or Kingston, Jamaica would have incurred a duty of 75 pounds the same amount that a Singapore-bound traveler would pay. Miami and Nassau are less than 200 miles apart. The duty doubled if a passenger traveled in a premium class rather than economy.

As the region seeks to attract tourists from developing markets such as Central Europe, China and India, such taxation may be a further detriment to the development of these markets.

In a November 2010 Caribbean Tourism Organization(CTO)report, entitled”The Impact of Air Passenger Duty and Possible Alternatives for the Caribbean”, an average decline of 10.8 percent was reported for stopover arrivals from the UK between 2009 and 2010. Annual traffic data to a popular Internet flight booking service, Cheapflights.co.uk, showed a similar drop. According to the report, there was an annual average drop of 11.6 percent in Caribbean destination searches in September 2010 compared to the previous year, suggesting the APD might be impacting the perceptions of cost, the report said.

Minister of Tourism and Aviation Vincent Vanderpool-Wallace is attending the summit in Brussels.

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