Jamaica worried over new tax regime from Europe

Jamaica says it fears that the decision by the European Union (EU) to bring aviation into its Emissions Trading System will start a process that will see increasing levels of environmental taxes levied on aviation before any global approach is agreed.

Tourism Minister Ed Bartlett, addressing the annual Caribbean Tourism Summit in Brussels, said that aviation and sea transport were not included in the Kyoto Protocol on climate change because of difficulties in assigning emissions to any specific country.

He said that at last November's meeting in Montreal, Canada, there was an understanding that a multilateral approach was desirable once general principles have been agreed.

"Unfortunately, aviation taxation in relation to the environment falls into the category of law with unintended consequences. While aviation taxation at a national or EU level can be regarded as a domestic measure, primarily aimed at changing the travel patterns of citizens, it directly impacts upon the development of our region as it has the capacity to negatively affect visitor arrivals and the viability of the industry that underwrites our economies," said Bartlett.

"The Caribbean would prefer to see a multilateral measure that treats all airlines and countries equally and that can be linked to development and, in particular, to the risk the region faces from climate change," he said.

"Our region is one that is most at threat from any change in sea levels as the majority of economic infrastructure is within five kilometres of the sea. As a consequence, we have fully supported climate-change initiatives," the tourism minister said.

"Are we now to be told that we will have to pay the price of Europe's concerns about climate change through a tax on our industry's development, with no consequent support in our need to adapt?" asked Bartlett.

He said that in a matter of weeks the Caribbean will know whether the United Kingdom government is to amend its air passenger duty (APD) that regional countries have described as "discriminatory".

Bartlett said the APD places the Caribbean in a higher tax band than that for flights to the whole of the United States (US) despite the fact that the majority of US destinations are farther away from London than the tourism-dependent economies of the region.

He said the Caribbean had been assisted in its lobbying efforts by other stakeholders and "we do not yet know whether we have been successful, but I believe we have to put forward a persuasive political and practical argument by suggesting an alternative revenue-neutral solution that is more closely aligned with actual carbon emissions".

Bartlett said the aviation tax has also united the region, adding, "It is, in effect, a tax on our development. Aviation represents the only realistic way to reach our region from Europe. Despite this, there has been no consultation, no impact assessment and no sense of partnership.

"What is not widely understood is that even if the particular design problems that the Caribbean is trying to address in relation to APD's banding structure are resolved, for us the tax is the tip of a global fiscal iceberg that we believe may eventually come to include all aviation and maritime transport.

"APD and similar unilateral measures introduced by Austria and Germany relate to a much broader issue that requires dialogue and a more joined-up approach as it touches our concerns about finance, aviation, maritime transport, development, tourism and foreign relations."

Bartlett said that behind the previous UK government's decision to introduce APD is a growing global movement to tax air and sea transport for greenhouse gas emissions.

"We, therefore, believe that the EU's decision to bring aviation into its Emissions Trading System will start a process that will see increasing levels of environmental taxes levied on aviation before any global approach is agreed.

"Taxing aviation is not helpful. Europe as a hub plays a vital role in growing the Caribbean tourism business. EU airports such as London, Frankfurt, Amsterdam, Madrid and Paris act as transit points that facilitate visitors from emerging markets such as China and India, Central Europe, Russia, all of which are new markets we need to open.

"Aviation is also important to the Caribbean for business and investment. Without sufficient airlift, investors will not put money into new projects. It is also essential to the Caribbean's extended community living in Europe who are also voters," Bartlett said.

- CMC