Peace at last, the Caribbean holiday market vs UK APD tax
It looks like the Caribbean and the UK government have reached a concensus on the much-heated APD tax debate. For the foreseeable future the UK government announced it would freeze APD charges, which could allow Caribbean tourism to get back on track.
There are ongoing celebrations in the Caribbean tourism industry after recent news revealed that the UK government had finally placed a freeze on Air Passenger Duty (APD) charges which had been previously resulting in higher aviation taxes that affected the Caribbean region the most.
The Caribbean Tourism Organisation (CTO) is rejoicing over the fact that, for the foreseeable future at least, Great Britain won’t be over-taxing its citizens when they decide to take holidays in the Caribbean. The CTO is also hoping that with the lack of these ever-increasing taxes, British tourists will return to the Caribbean islands for perfect, sun-kissed Caribbean holidays while holiday home buyers from the UK can be drawn back towards purchasing holiday properties in the Caribbean.
As the Caribbean has always enjoyed very close ties with Britain, this piece of news are welcomed by all the islands, which have lately been missing the considerable inflow of British tourists. These sunny islands are famous for being second home to a significant number of UK expats who own real estate in countries like St. Kitts, a very popular destination for Real Estate holiday homes in the Caribbean.
But the islands are largely popular among British holidaymakers too, and not the kind that buy properties abroad, but the ones who come year after year to enjoy postcard perfect Caribbean holidays under the region’s ever shining sun. The region is also highly appealing to a large segment of UK holidaymakers who like to stay in deluxe Caribbean hotels and enjoy luxury holidays in the Caribbean’s exotic beaches with reliably hot weather.
In short, the Caribbean economy relies strongly on tourism, which is the backbone of all enterprises in the region. In fact, it is safe to say that British tourism and property investment makes up the lifeblood of the Caribbean economy. The region thrives on what has always been a blossoming relationship with the UK travel market, having received over a million British visitors last year.
So, these APD travel charges which began in November 2010, were wreaking havoc in the Caribbean holidays market, having a serious negative impact on tourism to the islands.
The reason these taxes were inappropriately high was the result of the way they were calculated by a four tier banding system that measured the amount of duty levied according to the distance between London and the destination country’s capital city. However, since New York is on the East Coast of America, the taxes still charged less for flights to Hawaii even though it is 3,000 miles further from the UK than the Caribbean.
This meant that those travellers from the UK taking holidays to the Caribbean had to pay a whopping £75 per person in economy class, which placed a huge deciding burden when it came to selecting their holiday destination.
In turn, tour operators, resorts and hotels in the Caribbean had to slash their prices to keep visitors interested, and they all suffered a significant profit decrease as a result. For example in order to avoid the deterring effect of APD charges, Caribbean tour operator Funway offered to pay the Air Passenger Duty tax for all bookings to Sandals hotels in the region and provided 40 per cent discounts at a few of their resorts.
Now that Britain has officially frozen the Air Passenger Duty tax, directors are suggesting that the levy be subject to further review. Carlos Vogeler, United Nations World Tourism Organisation's Director for the Americas has described the tax as unfair and as posing a threat to tourism growth and development.
The Caribbean Tourism Organisation has, for some time now, been campaigning for the current banding systems of the APD to be modified, and they hope that their needs will be heard sooner than later. The good news is that this pesky tax is currently being negotiated in government talks.
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