CTO proposes revision to APD, ties it to carbon emissions

Barbados-based Caribbean Tourism Organisation (CTO) has proposed reforming the controversial air passenger duty (APD) imposed by Britain with a one-rate charge for flights within Europe and another rate applicable to long-haul trips.

On November 1, APD rates were increased for economy-class travellers to the Caribbean from £50 (US$77) to £75 (US $115); and for premium economy, business and first-class passengers, from £100 (US$154) to £150 (US$291).

The CTO, in a statement, said a detailed analysis of how the tax is affecting Caribbean economies and recommendations for change had been presented to the British government by CTO chairman Richard Skerritt, who is also tourism minister of St Kitts-Nevis.

The APD report, The Impact of Air Passenger Duty and Possible Alternatives for the Caribbean, was compiled by the CTO at the request of the British Treasury in follow-up to a delegation of six Caribbean tourism ministers who visited London in September.

Ministers from Antigua and Barbuda, Barbados, Grenada, Jamaica, St Kitts and Nevis and St Lucia met with British ministers at that time to protest against the tax that has been described as "a disgrace" by British Airways chairman Willie Walsh.

International concern

The report highlights the negative impact on Caribbean tourism and proposes a new approach to the banding structure that would divide the world into two zones, creating a more equitable relationship between the distance travelled and the taxation of carbon emissions.

CTO Secretary General Hugh Riley said countries around the world are concerned about the impact of such heavy taxation on tourism.

"We are proposing a revenue-neutral way to change the tax bands so the British government can still collect revenues, but not at the sake of damaging many fragile and tourism dependent countries around the world," said Riley.

The CTO statement said the new recommendation "would be simple two-tier tax band with each band structured so that tax is charged in proportion to its CO2 impact. This would mean taxing short-haul flights in coach by an additional pound and in other classes by slightly more."

The CTO report, which has been sent to the ministries of tourism, the treasury and transportation, highlights that if the official January to March 2010 figures are used as a sample, if all economy destinations from bands C to D were moved into band B, the lost revenue would be £11.44 million (US$18.48 million), using the November 1 APD rates.

Increasing economy rate

However, by increasing the APD economy rate for band A by just one pound, the increased revenue for band A economy short-haul travellers would be £14.22 million (US$22.97 million), the CTO said.

Skerritt called the APD a barrier to travel and tourism.

"This tax is discriminating against long-haul travel. It's also hugely unfair because it penalises destinations where there is no alternative to aviation travel. If you tax flights to France from the UK, passengers can choose to reach their destination by ferry, car or rail," he said.

"The Caribbean doesn't have that luxury. The tax is damaging thousands of people's livelihoods in countries around the world and the British government needs to do something immediately. We're now urging them to consider a simple rebanding of the whole process."

The CTO report "clearly demonstrates" that British visitors to the Caribbean from the UK are decli-ning, while those from other countries have been increasing, the chairman said, adding that the UK is the only major source market to have registered a decline in visitors to the region in the first quarter of 2010.

- CMC