Tax Weighing on region

Tax Weighing on region

THE world continues to be an unfriendly place when it comes to economic relations between large and small states. It is as if big countries expect to squeeze every ounce of resources out of smaller territories – and without looking to see what are the implications.

At a time when comments about co-operation and support flow from the mouths of those running the affairs of big countries, they somehow never seem to match their words with action. Instead, they have consistently adopted antagonistic postures.

The bone of contention here is the Air Passenger Duty (APD) which the United Kingdom Government has imposed on passengers travelling from the UK to destinations around the world. This measure, we are told, is in an attempt to deal with the environmental issue of climate change. But the tax is so structured that the burden has fallen on small island nations of the Caribbean which depend on tourism for their economic sustenance. Apparently seeming to care little about what this tax means to the Caribbean, the UK authorities continue as though everything is normal.

We wonder if there is not a global body which should be asked to intervene in this matter or where the Caribbean can lodge a protest to have it dealt with. Discussions with some who would know, suggest that it is not an issue for the World Trade Organisation, that global watchdog for free and fair trade, even if it comes over as a WTO member affecting the trade in service of another member. Normally, the WTO’s principle is that no state should erect trade barriers that would have a negative impact on another member, and that discrimination should be avoided in trade between countries.

Since we are also hearing about the Caribbean being discriminated against when it comes to this APD, it is time that someone advises regional governments about their options in having this matter brought to some Dispute Resolution Body.

This is in line with another report last December that the UK will continue to discriminate against the Caribbean in relation to the banding aspect of the Air Passenger Duty (APD) system. It is as if the British Government does not understand what this action means to these destinations, including Grenada.

Concerns have been voiced in several quarters about the devastating impact the APD is having on the tourism industry in the Caribbean. Airlines operating out of the UK have criticised the imposition; the Caribbean Tourism Organisation (CTO) had made it clear that it is deeply disappointed and surprised by the UK’s position; Tourism Ministers across the region are against it, and there are even some British MPs who find it distasteful.

The World Council of Tourism has, according to reports, urged the British Government to suspend the tax. In any case, the reports indicated, the Council reasoned that removing the controversial tax would result in the injection of £4.2 billion into the British economy, not forgetting the millions of jobs which can be created.

It should be recalled that in a 26-page document published last year, the British government said that APD rates to Caribbean destinations will continue to be considerably higher than those to some competitor destinations.

This tax is a blow to the normally friendly relations between the UK and the Caribbean, and for as long as it remains in place, those relations will be weakened.