EDITORIAL - UK abandons special relationship

People and governments of the English-speaking Caribbean like to believe, and often claim, that their countries have a special and cherished relationship with the United Kingdom.

Britain, too, encourages the notion. Or, they used to.

We are not so sure anymore about the status of the British-Caribbean relationship, except for the fact that from the perspective of Whitehall, the cherished bit has been chucked out of the door. London's approach to the air passenger duty (APD) regime it instituted a few years ago underlines the point.

British political leaders and their technocrats in Whitehall are well aware that tourism is the mainstay of most Caribbean economies and that this region competes with the rest of the world for markets that are price sensitive. This market includes the United Kingdom. That is why the APD is, for this region, a matter of significance, and why some people believe the UK's management of the system to be an act of economic hostility towards the Caribbean.

Carbon footprint

The APD, as sold by the UK, is to force people to pay for their carbon footprint with a tax on air travel. Last year, the tax added £2.3 billion to the UK treasury, at a time when Britain is facing a fiscal crisis.

Supposedly, the farther someone flies, the more he pays. Except that is not the case, as Caribbean governments and tourism officials complained when the tax was being formulated.

What happens is that the tax is calculated by the distance between London and the capital city of the country where the flight terminates. So, the tax on a ticket for a trip from, say, London to Hawaii is determined by the distance between London and Washington, DC. The upshot is that a tax on the ticket to the Caribbean, which may be half the distance, may be 25 per cent more than the tax on one to Hawaii.

This anomaly, as Mr Willie Walsh, the CEO of British Airways, pointed out, contributed to the sharp drop in British visitors to Caribbean destinations over the past year when the tax on tickets to the region increased by two-thirds. In some cases, the decline has been as high as 25 per cent recently.

In Jamaica's case, the fallout for the first half of 2010 is approximately five per cent, after last year's decline of two and a half per cent.

Of course, the decline is not entirely attributable to the APD. There is, too, the recession and the UK's slow recovery. It is hardly questionable, however, that the tax, as currently structured, places the Caribbean at a disadvantage against some of its major competitors. And even those Britons who make the trip to this region are likely to have less money in their pockets to spend.

The British government is about to compound the problem. The tax is scheduled to rise again before year-end.

The likely result is an even steeper fall-off in visitor arrivals to Caribbean destinations, not least, Jamaica. This will mean greater pressure on regional economies and greater social stress.

If only there was a special relationship to invoke.

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