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CARICOM disappointed at APD response

CARICOM disappointed at APD response

Wed, November 14, 2012 - 1:22 PM

CASTRIES, St. Lucia – Caribbean Community (CARICOM) Chairman, Dr Kenny Anthony has expressed disappointment that the United Kingdom has “opted to retain its discriminatory approach” in dealing with the controversial Air Passenger Duty (APD).

Anthony, who is also the St Lucia prime minister, had written to the British Chancellor of the Exchequer George Osborne on the "deleterious effect" the controversial United Kingdom Air Passenger Duty (APD) tax is continuing to have on Caribbean economies.

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 £5 (US$7.85) per person.

Regional governments have been lobbying London to remove the tax, which they said negatively affect the growth of the tourism industry since the Caribbean has been placed in a band that makes travel to the region much more expensive than travelling from London to the United States.

Anthony said he had received a response from the British government official 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.

"In your letter you recognize the fiscal challenge that the UK faces and so I hope you will understand that the Government remains focused on tackling the deficit in order to protect the UK economy from global instability and secure sustainable long-term growth. Air passenger duty makes a vital contribution to the public finances and it is important that revenues from the duty are maintained,’ Osborne wrote.

Anthony said it is interesting “that the United Kingdom opted to retain its discriminatory approach in the implementation of the APD.

“In my letter, I drew to the attention of the Chancellor that it was unfair and unjustifiable for travellers from the United Kingdom to the United States to pay a lower duty than travellers from the UK to the Caribbean, when, for all practical purposes, the United States and the Caribbean are  in the same geographical zone”.

But Osborne replied “you refer to revenue neutral solutions for changing the structure of the APD in your letter. As you will be aware, changes to the banding structure were considered in detail within the consultation.

“In weighing up the case for reform, the Government recognized that no banding structure would be entirely free of anomalies and that a revenue neutral move to a two or three band system could not be achieved without a rise for passengers flying to band A and B, some 90 per cent of total passengers.”

The Chancellor agreed that the “links between the UK and St Lucia are important for both countries, especially given the large Caribbean Diaspora in the UK, for whom air travel is an essential means to visit friends and family.”

The World Travel and Tourism Council (WTTC) said that new research shows that removing the APD would result in an additional 91 000 British jobs being created and £4.2 billion (US$6.5 billion) added to the economy within a year. (CMC)

 

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