THE ISSUE: Proven deterrent to air travel
NO ONE LIKES taxes, except the institutions that collect them.
Barbadians have been crying out and complaining about the different taxes that have either been increased or introduced in recent years.
Despite this widespread dislike for taxation, though, it is clear that taxes are here to stay.
The aviation industry is one sector in which taxation has generated controversy.
Barbadians and their neighbours in the Caribbean would remember the impact of the United Kingdom’s contentious air passenger duty (APD).
Regional tourism officials argued that the APD as administered in relation to the Caribbean led to reduced travel to this part of the world by British nationals. Changes were eventually made to the tax and other amendments were expected.
Taxes on the aviation industry, and indeed the airline industry, continues to be a hot topic of discussion in Barbados and internationally.
But what are the facts? Last year, the Barbados-based Caribbean Development Bank released a report titled Making Air Transport Work Better For The Caribbean. The report concluded that when measured against 39 airports stretching to as far as Key West, Florida, Barbados’ charges were the fifth lowest at US$55.30.
Noting that the taxes and fees were “charged indirectly through airlines”, the CDB report showed that Jamaica topped the list with US$114.40 in Kingston and US$106.11 in Montego Bay. It was followed by the Dominican Republic (US$105.70), Haiti (US$99.20), The Bahamas (US$99.10), Antigua (US$98.10), and Turks and Caicos Islands (US$93.10).
The report pointed out that airline tickets “includes various charges and taxes that the airline passes on”.
“Charges represent the cost of building and operating airports and their facilities.
“Taxes are levied by governments for other reasons, for example, to address the externalities imposed by air transport, such as climate change or simply to raise revenue,” it said.
A few years ago, St Kitts and Nevis Minister of Tourism and International Transport Ricky Skerritt warned the International Civil Aviation Organisation that proposed aviation tax increases could affect the cost of air travel between the Caribbean and the regions proposing the tax hikes.
This included the United States and Europe.
“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 raised fares,” Skerritt said.
“Further airfare increases would be certain to hurt the price-sensitive tourism and travel market, and subsequently our small vulnerable economies,” the minister said.
Such issues have generally remained unresolved. Just last month Dominica’s Minister of Tourism Senator Robert Tonge said there was a need to reduce the high level of taxes associated with intra-regional travel.
He believed “the tax on the tickets are obviously too high” and referred to research that he said showed “if you reduce the taxes you could actually increase the number of people coming to the country”.
In the past, officials of regional air carrier LIAT complained that in some instances half of the cost of its tickets was government tax.
Speaking at last year’s State Of The Industry Conference held by the Caribbean Tourism Organisation, JetBlue chief executive officer Robin Hayes, said high taxes were posing a major challenge to airlines servicing the Caribbean.
“We know if the tax can come down by US$50 dollars, we could stimulate a high number of travellers to the region.
“We would add the capacity, [and] the overall tax take would go up because more people are coming, they’re staying longer,” Hayes said.