Regional travel taxes comparatively low

While defending the level of taxes on regional air travel, Chairman of the Caribbean Tourism Organisation (CTO) Dominic Fedee is suggesting that governments consider moving away from a blanket approach of applying the taxes.

Fedee, Minister of Tourism in St Lucia, gave this suggestion on Wednesday as he responded to a question during the CTO’s annual review of the region’s tourism performance.

He explained that while he did not believe the taxes were too high, he believed that countries in the region could apply the level of taxes based on the distance of the trip.

“I can see that inter-regionally Caribbean island to island is something we need to look at because what individual countries have done is they have sort of used a broad-based approach. So even though St Lucia is 35 minutes away from Barbados, the tax that both countries have applied doesn’t match up on the distance,” said Fedee.

“But on a short distance an airline can only charge so much. Therefore, it doesn’t give the regional carrier that much wiggle room on which they could be competitive. So I get that point, and I think more and more ministers of finance around the region are beginning to appreciate that, and the dialogue and the discussions are ongoing. But it really does take a long time to arrive at a consensus that is going to be workable,” he said.

In some cases, the taxes on regional travel can reach as high as 190 per cent of the base fare.

In addition to a number of existing fees, Barbados implemented a new US$35 airport service charge in the form of a departure tax for those travelling within the region effective October 2018.

This tax, officials said would go towards the improvement of the island’s airport.

A year prior, St Lucia had also implemented a US$35 Airport Development Tax.

Fedee said overall he did not believe government taxes were too high, adding that the cost of regional travel was not the only factor limiting more residents from moving around in the Caribbean.

He argued that even when oil prices would dip airlines still would not reduce their prices due to their “revenue strategy”.

“So it says to me that the taxes are not the only factor,” he said.

Fedee said the taxes on regional travel were comparable with other international destinations and insisted that they were necessary to help countries develop their tourism infrastructure.

“The thing is that governments are going to look for ways to build and replace ailing tourism infrastructure, and if tourism is their business then what you are going to see is that tourism might be susceptible to some of those taxes. When compared to the rest of the world I think the taxes in the Caribbean are still quite low,” he said.

“Let’s not only look at airline taxes, but let’s look at room and head taxes as well. You go to some of our main cities in some of our industrialized countries you see that the tax rate is comparatively higher. So I think that we are low in comparison to a lot of places,” he insisted. marlonmadden@barbadostoday.bb