LONDON–A new report has said that scrapping the controversial Air Passenger Duty (APD), which has negatively impacted on the tourism industry throughout the Caribbean, could generate 60,000 jobs by 2020.The report commissioned by four airlines, British Airways, easyJet, Ryanair and Virgin Atlantic, is also expected to boost gross domestic product (GDP) by almost one per cent.
The APD, instituted in 1994, is a British environmental tax aimed at offsetting aviation's carbon footprint. In its initial stage, it was set at US$7.85 per person.Caribbean governments have been lobbying London to remove the tax, which they said negatively affects the growth of the tourism industry since the region has been placed in a band that makes travel to the region much more expensive than travelling from London to the United States.
The rate of APD paid by travellers is calculated according to the distance from London to the destination country's capital city. Under this system, passengers travelling to Caribbean destinations, around 4,500 miles from London, pay more in APD than those travelling to Hawaii, which is more than 7,000 miles from the British capital.
Overall UK arrivals to the Caribbean region are down around 12 per cent, more than is being seen in other source markets suggesting it is not just down to the global recession.Last year, St Lucia Prime Minister and former Caribbean Community (Caricom) chairman Dr Kenny Anthony expressed disappointment that the United Kingdom had "opted to retain its discriminatory approach"
Anthony said then that he had received a response from the British Chancellor of the Exchequer, George Osborne which he described as "interesting in one respect"."The Chancellor more or less confirms that the APD was introduced primarily to raise revenue to tackle the deficit in the United Kingdom," Anthony said.The airlines that use the London route argue the APD acts as a major barrier to both tourism and potential investment in Britain.
The UK is currently ranked 134th out of 138 countries by the World Economic Forum in terms of competitive aviation taxes and airport charges, ahead of only Senegal, Ivory Coast, Mali and Chad.The study by the four major airlines estimates the economy would be �16 billion better off by 2015 were APD to be scrapped.
Withdrawal of the tax would deliver an immediate increase of as much as 40 per cent in the number of foreign visitors to Britain, the study estimates, noting it would also encourage airlines to invest in new aircraft and develop routes to high-growth regions.Last year, the four airlines had urged Osborne to suspend the planned APD pending the outcome of the independent study of the economic effects of such a tax rise.
The UK government plans to again raise APD rates in April 2013 and bring business jet fares into the tax net.The tax, first introduced in 1994 as a British environmental tax aimed at offsetting aviation's carbon footprint, was calculated on a two-band system, one for European destinations, one for all other destinations. That two-band system remained in place, despite a tax increase in 2007.
The APD issue heated up in April 2009 when rules for a much higher, four-band, mileage-based tax were announced. The tax amount was calculated on the distance between London and the destination country's capital city.The US is in Band B, using Washington as the capital; the Caribbean is in Band C because their capital cities are farther from London, making the APD higher for UK travel to the Caribbean than to Florida, California or even Hawaii.
The four-band rules took effect in November 2009, boosting the average tax from US$53 to US$67 per passenger for travel to the Caribbean. It later rose to $100.The tax from London to Port-of-Spain, starts at $186 per passenger in economy.A family of four flying from the UK to the Caribbean now pays close to US$625 in taxes. In 2005, the same family paid US$125 in taxes.
