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Aviation Taxes To Hit Caribbean Tourism

by Mike Godfrey, Tax-News.com, New York

30 September 2013

The Tourism and International Transport Minister of St Kitts and Nevis, Richard Skerritt, has warned the International Civil Aviation Organization (ICAO) that proposed aviation tax increases could affect the cost of air travel between the Caribbean and the regions proposing the tax hikes.

Speaking at the ICAO Plenary Session on September 25, Skerritt said that the US government has proposed increasing five aviation taxes and imposing a new USD5.5bn departure tax.

Skerritt highlighted that the UK's Air Passenger Duty, the world's highest flight tax, was again increased recently placing the Caribbean region at a greater disadvantage to European destinations. "The consequence for us in the Caribbean is that the APD banding levels now makes it harder than ever for us to compete for UK tourists when they can travel closer to home for much less," he pointed out.

He also argued that the inclusion of aviation in the European Union emissions trading system "will not be effective in reducing carbon emissions, but will simply lead to increased air fares." He urged the ICAO to work towards a global deal to avoid the reintroduction of the tax.

"Considering the future increases likely to be passed through to consumers from the US aviation taxes, the continuously increasing UK APD tax, and possibly the proposed EU carbon emissions tax, it is only a matter of time before the airlines serving our region again raise fares. Further airfare increases would be certain to hurt the price-sensitive tourism and travel market, and subsequently our small vulnerable economies," the minister said.

The Caribbean has the world's most tourism-dependent economy, according to Skerritt. "In 2012, the total contribution from travel and tourism to the world economy represented 9.3 percent of global GDP and accounted for 1 in 11 jobs. In St. Kitts & Nevis, the total contribution of travel and tourism to our economy is 25.9 percent of GDP and it accounts for 1 in every 4 jobs. In some other Caribbean islands, tourism provides practically the only means of economic growth."

TAGS: tax | air passenger duty (APD) | aviation | travel and tourism | Saint Kitts and Nevis | United States | European Union (EU) | Europe

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