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Curacao Censured For 'Shock' Airport Tax Hikes

by Phillip Morton, Investors

26 December 2012

Members of the Latin American and Caribbean Air Transport Association have criticised the decision of authorities in Curacao to hike airport taxes and landing fees by 150%.

Passenger Facility Charges (PFC) and landing fees were hiked overnight by 150% on December 1, 2012, with airlines only receiving notification on November 30, 2012.

Although the Curacao airport authority has said it will assume the cost of the PFC increase on tickets previously sold at a price that included the previous level of PFC, operators will be required to absorb the additional taxes on fares already sold that are scheduled to depart after February 28, 2013.

"This initiative is deplorable and counters International Civil Aviation Organization (ICAO) recommended practices for several reasons. Carriers condemn the tax increase implementation by the airport authorities, as it will negatively affect not only passengers and airlines but the economy of the island. Raising taxes by 150%, from one day to the next, is drastic and unheard of," ALTA said.

The air transport industry currently supports 5.4 million jobs and USD125bn in GDP in Latin America and the Caribbean, directly creating an estimated 524,000 jobs in 2010 and a total of more than 4.0 million jobs supported through the catalytic impacts of travel and tourism. ALTA highlighted that raising airport taxes and fees proves to be detrimental for the local economies, causing a sharp decline in both the number of visitors to a destination, and the number of tourism related jobs within that destination.

The government of the Netherlands issued a "formal compliance order" in July with respect of Curacao's declining financial situation, requiring the territory to immediately address the budgetary concerns raised. In the eight months to September 2012, the government had racked up a budgetary deficit of ANG153m (USD86m), following a ANG98m budgetary deficit in 2011, thus contravening a pledge made upon its independence from the former Netherlands Antilles that it would maintain balanced budgets.

On October 10, 2010, a new constitutional relationship between the Netherlands and its Caribbean dependencies became effective, granting greater autonomy to Curacao and Saint Maarten and dissolving the Netherlands Antilles. The Netherlands agreed to write off the two territories' debts in exchange for an agreement that the territories' authorities would prudently manage their finances.

TAGS: compliance | tax | Netherlands | aviation | international financial centres (IFC) | budget | fees | travel and tourism | offshore | Netherlands Antilles | Saint Maarten

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