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Jamaica could face lukewarm winter season Tax noose threatens Caribbean tourism

David Jessop

The Business of Tourism

Tax noose threatens Caribbean tourism

David Jessop, Contributor

Much has been written about the United Kingdom government's air passenger duty (APD). However, less is said about the approach of the Caribbean to taxing visitors through a now vast range of ticket taxes, room taxes and other levies on those who choose to spend their hard-earned income in the region.

So extensive has this range of taxes on visitors become, that it is quite possible that a moment may come soon when the add-on effect results in the number of arrivals at the lower end of the market falling and Government's tax take from tourism declining.

Already, many airlines and tour operators who are sympathetic to the Caribbean's case on APD are saying in private that recent moves to levy new taxes, for instance for airport development or through higher departure taxes, are beginning to cause them to think about the nature of the region's market in the longer term, particularly from Europe.

UNPROFITABLE

Typically, as peripheral prices increase ,tour operators seek ever bigger discounts from hoteliers. However, they recognise that this can only go so far before hotels become unprofitable, unable to invest in maintaining their facilities or have to, where possible, upscale their product to meet the expectations associated with the higher price point.

I recently had the opportunity to consider the aviation aspects of taxes and service levels at first-hand when travelling in the Eastern Caribbean between Grenada, Trinidad and the British Virgin Islands (BVI) and on to Miami.

Although my check-in experiences were unfailingly pleasant, the flights on time and my luggage there at each stop, the complexities of such a relatively short journey made the process lengthy and tedious. In this respect, the president of the Caribbean Hotel and Tourism Association's recent comments on the notion of 'bureaucratic indulgence' was ably met by having to go through security once in the BVI and twice more en route to Grenada while undertaking two airside plane-to-plane transits. Moreover, in the BVI, a nation dependent on tourism, the immigration procedure and lack of any sense of welcome until one left the terminal suggested the need for reordered priorities.

But perhaps more significant than any of this was the cost and the absence of connectivity, making what ought to be a simple journey far more complicated than when I first travelled around the Eastern Caribbean in the 1970s on a hand-written multisector ticket covering flights on more than one airline.

TAX NOOSE

In the case of LIAT, the information provided on their eticket was revealing. It included the precise breakdown of the cost. It explained how a basic fare between Trinidad and the BVI of US$267 reached US$341 or worse a US$98 flight from Grenada to Port-of-Spain lasting a little over 20 minutes rises by 61 per cent to US$160. The answer is a sales tax; a passenger facility charge; an airport development tax; an airport authority tax; a fuel tax; and more.

While there is the urgent need for a competitive and truly regional airline of the sort run efficiently and profitably in Central America by the publicly quoted company Avianca-Taca, it may be that a greater danger to Caribbean tourism lies in the ever-increasing list of taxes that are making Caribbean travel less and less viable for Caribbean citizens and visitors alike.