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Calls for tax reforms on flights to the Cayman Islands

McKeeva Bush, Premier of the Cayman Islands, has called for reforms to the "unfair" Air Passenger Duty (APD). As a British Overseas Territory, Cayman Islands holidays are a popular option for British holidaymakers.

Calls for tax reforms on flights to the Cayman Islands

In a letter to British Chancellor George Osborne, sent last week on Thursday 24th November 2011, the Caymanian Premier requested a revision to the controversial Air Passenger Duty (APD) which was last increased on 1st November 2010. As a result of the increase, a family of four flying premium class from London to their holidays in the Cayman Islands stands to pay £600 in APD taxes alone. Mr Bush appealed to Mr Osborne citing adverse effects to the quality of life of ordinary citizens who need to travel to the Caribbean, and the Cayman Islands more specifically, on personal or family business. Even more crucially, Bush noted a reduction in the number of people going on holidays to the Cayman Islands as a result of the 2010 increase, putting a strain on the country’s tourism industry.

This is not the first time the APD has come under pressure. In 2009 Kenya’s tourism minister, Najib Balala, described the tax as a burden for tourists that would prove detrimental for tourism in developing countries. Critics have also noted that the tax, aimed at reducing carbon emissions, fails to take the efficiency of the aircrafts’ engines into account with all airlines and aircrafts being treated equally.

 The Cayman Islands
Image by: InternationalPropertyMole, on Flickr

The current tax system has been described by the Premier of the Cayman Islands as discriminatory, with suggestions that the UK government may not be working in the interest of their overseas territories and the Commonwealth community. Currently, a higher APD is charged for flights to the Cayman Islands than to the West Coast of America. “In the Caribbean there are no less than sixteen Commonwealth and Overseas Territories and I would suggest that our ‘special relationship’ with the United Kingdom requires even more favourable treatment than the United states of America”, Bush noted in his letter. A family of four flying in premium class would be faced with a £120 higher APD tax if they selected Cayman Islands holidays over Hawaii for example.

Mr Bush has attributed the inequality of the APD to the presence of a complex four band system, and he is currently advocating a simpler, easier to administrate two band system. “It cannot be right that every destination in the USA just west of the East Coast cities is in a lower band than the Cayman Islands even though they are much further away…A two-band system is easier to administrate and can bring in an equivalent amount of revenue for the Treasury whilst being less discriminatory to the Caribbean” Bush wrote.

All eyes will be on the Chancellor of the Exchequer in the coming days, with speculations that Mr Osbourne will increase the aviation tax even further in his autumn statement due on the 29th November 2011.

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