Caribbean economist urges governments to reduce air fares

(Source: Demerara Waves Online) – Director of Economics at the Caribbean Development Bank (CDB), Justin Ram has slammed regional governments for the high cost of air travel and he has called on them to slash the taxes and rake in more value-added and income taxes.

“What I’m saying to governments—and I go all over the Caribbean—I say to governments: ‘stop being so myopic, reduce taxes on travel and aviation and let’s get more regional travel. You will recoup the revenues because when those people come into your country they will be buying more stuff and they will be paying more VAT (value-added tax),’” he told a Georgetown Chamber of Commerce and Industry (GCCI) dinner held on Friday.

Ram, who was the featured speaker at the launch of the 10th edition of Business Guyana titled ‘Guyana: Potential Unleashed’, said the Caribbean faced a “real issue” when it comes to regional air travel.

Noting that over the last 10 years, most Caribbean people were travelling extra-regionally while intra-regional travel declined because of the high taxes and fees, he highlighted that 60 percent of the airfare for Barbados to St Lucia are made up of taxes.

Ram reasoned that if the taxes and fees on airfares are reduced, Caribbean governments would earn more from VAT and income taxes because Caribbean people will travel to other countries and spend more on goods and services, and more persons would be employed resulting in more income tax revenue.

The CDB official was also concerned about the many security checks that travellers have to undergo while transiting airports, and he called on Caribbean governments to reintroduce the Cricket World Cup 2007 security system that had provided for persons to be checked once.

“This is ridiculous and we really have to ask our policymakers to reform this,” he said.