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St Lucia Addresses UK Chancellor On APD

by Amanda Banks,, London

23 July 2012

Saint Lucia's Prime Minister, Kenny Anthony, has condemned UK political leaders' resistant stance on the reform of the UK Air Passenger Duty (APD) regime, which has been the subject of extended lobbying by the Caribbean region.

In a letter to the UK Chancellor George Osborne, Anthony noted "the deleterious effect that UK APD continues to have on the economies of the Caribbean". He pointed out that, "Caribbean leaders have raised this matter on several occasions, and have discussed the negative impact it is having, with the UK Prime Minister David Cameron, with William Hague the Foreign Secretary when he was in Grenada earlier this year for the UK Caribbean Forum, and with other British ministers and the UK Parliament."

APD was first introduced in the UK in 1994 but it was subject to punitive revisions within the government’s November 2008 pre-Budget report. The new APD system comprises four bands depending on the distance travelled, and has been criticized for being unjust, in particular by imposing higher rates on Caribbean flights compared with those to America and other equidistant destinations.

The Prime Minister's letter states: “The Caribbean understands the fiscal challenge faced by the UK in respect of raising revenue, but we do not believe that APD should be imposed unfairly, or at the expense of the Caribbean economy and our community in the UK.”

In the case of Saint Lucia, Anthony explained that: “Visitor arrivals from the UK [have] declined every year for the past three years. In 2010 arrivals fell 19.4% below the 2008 level and 2011 registered 14.4% less compared with 2008. This decline in arrivals is exacerbated by a further reduction in on-island expenditure as the tax has had a negative impact on travellers' budget, resulting in reduced economic benefit to the country," he said. "Indications are that tourism receipts associated with these declining numbers in the last three years have fallen on average more than 25% below the 2008 level."

Anthony's letter comes after calls at the Caribbean Tourism Summit for territories to invest more money towards redoubling lobbying efforts against APD. Regional governments agreed more cohesive efforts would increase pressure on UK policymakers. However, The region's pleas have been rebuffed by the UK government despite support from some UK parliament bankbenchers and other ministers.

In concluding, Anthony told the Chancellor that Caribbean governments “remain committed to pursuing a positive dialogue with the UK government about alternative, revenue-neutral solutions that could address the discriminatory aspect of the current banding system by having the Caribbean and the USA placed in the same lower band,” and expressed hope that the issue could still be resolved amicably.

TAGS: tax | air passenger duty (APD) | Saint Lucia | aviation | Grenada | United Kingdom | offshore

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