Prime Minister Ralph Gonsalves. (iWN file photo)

A group lobbying for a reduction in taxes and fees on intra-regional Caribbean travel has written to Prime Minister Ralph Gonsalves on behalf of 20,000 persons who have “come together in opposition to the current cost of intra-regional travel and governments’ role in escalating airfares”.

Dalano R. DaSouza, spokesperson for the group “Citizens Against High Intra-Regional Caribbean Travel Taxes” said in a press statement that over the past two weeks, packages containing copies of the petition bearing over 20,000 signatures were dispatched to the offices of the CARICOM Heads of Government and the Secretariat in Guyana.

Also included in the packages, was a letter to each head of government, “cogently outlining the case for dialogue on the vexing issue of high intra-regional Caribbean travel taxes and fees,” the press release said.

DaSouza said that to date, only the offices of the President of Guyana, David Granger and Keith Mitchell, prime minister of Grenada have acknowledged receipt of the communication.

“Accordingly, The Citizens Against High Intra-Regional Caribbean Travel Taxes is calling on the other CARICOM Heads of Government to respond to the petition submitted to their offices,” DaSouza said.

“By signing our petition, the people of the region are collectively asking to be heard on the important issue of intra-regional Caribbean travel taxes. We hope that our leaders see it fit to engage with their constituents on this important matter,”
DaSouza said in the press release.

In a Nov. 7 letter to Prime Minister of St. Vincent and the Grenadines Ralph Gonsalves, DaSouza, said that the issue of taxes, fees and charges (TFCs) in air transport has been a source of controversy globally, not least in the Caribbean.

He said that the Caribbean is a unique geographic space heavily dependent on air transportation to support the tourism industry whose contribution to the gross domestic product (GDP) of CARICOM member States is significant and for some unparalleled.

“In short, tourism is a critical component of the region’s strategic development plan.

However, the increasing cost of regional travel threatens to stymie our progress,” DaSouza wrote to Gonsalves.

He said that high and increasing TFCs have contributed to the decline in intra-regional travel in recent years.

“A 2018 study by the Caribbean Development Bank (CDB) on regional air transportation found that intraregional travel’s share of total Caribbean travel declined from 15% to 9% between 2012 and 2017.”

At the same time, travel from the Caribbean to extra-regional destinations increased by 6%, DaSouza said, adding that despite the slight rebound in intra-regional travel during 2018 reported by Caribbean Tourism Organisation (CTO), the cost of travel in the region remains a significant impediment to connectivity and growth.

The letter said that a 2007 study by InterVISTAS2 Consulting commissioned by the International Air Transport Association (IATA) conducted an extensive literature review of publications and research spanning 25 years and concluded with overwhelming certainty that higher airfares result in reduced passenger traffic demand.

“In the Caribbean, this issue of cost is exacerbated by the TFCs which, when added to the basic fares of carriers serve to make overall ticket prices devastatingly expensive for passengers. Analysis in the aforementioned CDB study revealed that on average, TFCs added 54% (40% from taxes and 14% from charges) to the cost of a LIAT one-way ticket in 2016. TFCs constitute similar proportions of fares for Caribbean Airlines (CAL) and other regional airlines,” DaSouza said in his letter to Gonsalves.

He pointed to the example of a recent CAL promotion to mark its inaugural direct flight from Jamaica to Barbados, which advertised a fare of US$100 round trip.

“However, when TFCs were added to this fare, the total cost of travel increased by US$154 to US$$254. In this case, TFCs amounted to more than a 150% increase in base fare.”

The letter included a breakdown of the different taxes imposed by CARICOM governments compiled from airline websites.

In the case of SVG, the data shows that air passengers have to pay an airport charge of US$ 40.00 and 5% on their fare when Argyle International Airport is the airport of origin.

But in other jurisdictions, air passengers pay even more in taxes, as is the case in St. Lucia, for example.

Castries charges an airport development fee of US$35, an airport service charge of US$25, a Security Charge of US$4.82, 7.5% of the fare when St. Lucia is the origin airport, a US$5 passenger facilitation charge for arriving passengers only and US$0.37 for a facilitation charge for arriving passengers.

DaSouza said in his letter that there is no denying that airports are expensive.

“Consequently, there is almost an expectation that nations implement measures to extract revenue from passengers who utilise airports across the region to contribute not only to their operation, but also to fund aspects of government budgets.”

He said that for his group, the questions are how much TFCs can authorities impose on the traveller before negative overall outcomes begin to accrue.

“Specifically, how much TFCs can CARICOM Governments extract from intra-regional travellers before the region begins to be negatively impacted by the lower passenger volumes?” he said.

DaSouza said his group believes that the region is at “a critical juncture, where over-taxation while meeting airport operational costs is compromising regional development and economic integration for the worse.”

He said that the TFC regime applied to travel originating from and destined for outside of CARICOM is not the focus.

“We are not asking governments to disrupt this income stream. Instead, our efforts are concentrated on the lowering of TFCs on travel between CARICOM states…

“Rather, what we espouse is based on principles enshrined in the Revised Treaty of Chaguaramas signed by regional leaders optimistic about the manifestation of regional advancement through genuine functional cooperation. Principles of collective responsibility and shared destiny, principles of reduced insularity and myopia built on the realisation that by depending more on each other, we can depend less on non-CARICOM states for our social and economic progress.”

He said that numerous studies have used price elasticity of demand (PED) which measures the responsiveness of demand to changes in price have predicted that if governments were to reduce TFCs, intraregional Caribbean travel would increase significantly.

Amsterdam Economics, in their study “Economic benefits of reducing aviation taxes in Latin America and the Caribbean”, concluded that removing aviation taxes and fees would drive efficiency and connectivity growth to the benefit of both the consumer and the wider economy, DaSouza said.

Moreover, CDB analysis suggests that there will be short run and (larger) long run boosts to the GDP of countries that reduce TFCs. The higher the magnitude of the PED, the greater the increase in GDP, and the more likely there will be a positive net financial impact, where additional tax revenue generated by increasing economic activity would rival TFC revenue foregone.

“In other words, the increase in travel will likely see governments collect other tax revenue similar to the amount lost by reducing TFCs. This would manifest in the form of revenue increases from taxes already in existence in the economy over time (e.g. Sales Tax/VAT),” Da Souza said.

“Instead, CARICOM Governments have effectively turned regional airlines into major tax collectors and in doing so pushed the cost of travel beyond the reach of many Caribbean citizens.

“We therefore call on CARICOM governments to re-evaluate the current TFC regime on intraregional travel. Over-taxing regional travel is counter-productive to regional connectivity and the growth and productivity of our economies,” DaSouza told Gonsalves.

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16 Comments

  1. The Comrade will not like that one little bit. Argyle airport is already losing more money than was originally expected because of very low international traffic numbers. The 10 400 seat jets a day estimated by Gonsalves has in fact been no 400 seat jets a day at all ever.

    https://www.iwnsvg.com/2013/06/03/ten-400-seater-jets-a-day-at-argyle-possible/

    SVG’s Boing 747 with 400 seats is now located in Barbados standing by for a call from Maduro.

    https://www.iwnsvg.com/2019/08/07/re-calculating-the-argyle-dubai-non-stop-now-with-stop-in-bridgetown/

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  2. The Cumrod can be likened to a wrecking ball…always destruction in his wake.The tools the Cumrod uses as his wrecking ball are VAT, extremely high taxes , intimidation and victimization .Believe you me the Cumrod’s wrecking ball is far more destructive than the literal wrecking ball.Lets just say he’s a master wrecking ball .Perhaps one of the best in living memory.

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  3. I agree myself.i wanted to come home every Christmas and birthdays but just for a short time from anguilla to st.vincent or any other Caribbean countries it is very very very very very expensive to travel .Please help us Mr prime minister .

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  4. This man Gonsalves only understands how to both beg and “Tax-and-spend” and he can’t even spend properly for our nation’s good. He spends only to boost his own oversized ego and his extended family’s wellbeing.

    For the evidence? Just look at the state of the Country’s economy and the number of persons here unemployed. Neglected slum-village Kingstown, is also enough evidence of the utter failure of the man in office.

    Time for tyrant to go and leave us to chart our own path to development and eventual prosperity!

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  5. If I heard of this petition I would have signed it as well. I find it very arrogant of these Shareholder Governments to charge such high taxes for anyone flying in the Caribbean and then crying that they want more money. It is one of these flaws of socialism that depends on high taxes which in turn hinders growth and increases poverty. All it does is increase the power of government because uneducated and brainwashed people do not understand how economics work. Most of them will never be able to fly anywhere. The Global Monetary System already causes enough poverty and the last thing we need is elected officials to dogpile more misery onto our backs to quench thier greed for revenue in order to pay for silly projects and thier luxury lifestyles. I would be more happy with a government with less grandiose promises but lower taxes.

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  6. Da Souza sounds to be far too intelligent for Caribbean Governments. The reason why we are in such dire straits throughout the Caribbean is because the leaders do not seem to understand economics. What he is saying has been proven many times in the last hundred years, but governments think short-term, in election cycles, and generating vast wealth and prosperity for thier people comes a far second or further down the list, than to winning elections.

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    1. Dasouza made some points I do agree with , however increase in taxes are not a clear and decisive reason for reduced travel to the region . many factors effect travel etc. worldwide recession and financial pressure. regardless to what country everything has increase and gotten more expensive while the poor get poorer .

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  7. I have a proposal , if only temporarily and that is to ……Charge tourists and visiting travelers more than locals and residents and citizens of the region .

    Even though the tourists are significant contributors to the economies of the region , its only seasonal and they are not permanent residents so their contributions are not consistent year round . Unlike a resident or citizen who pay internal revenue dues and contribute to the growth and development in the economy in many different ways etc. work force, business, agri , edu

    some naysayers may say ,charging or increasing taxes on visitors and tourists will deter them from visiting again or often ……….but I dont agree because , if anyone can afford tax increase , it would be tourists (without getting into reasons why they can afford) for short answer . Obama mentioned this when he increased taxes on the wealthy and rich in the USA , furthermore because of the Caribbean uniqueness we will always have new and returning visitors .

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    1. On the surface it seems like a good proposal AL but I think the naysayers are correct, If the Caribbean continues to raise taxes, even if it is just on tourists, we may get almost the same amount to come here as they do now, but they will not ever return. I have already met many tourists that were expecting prices to be about what they pay at home but were disgusted to see that in particular most prices in SVG are even higher than in other Caribbean destinations and you get less…Pay more and get less is not a good business model even though the government here does all it can into forcing the private sector into applying it. Those tourists said they will never come back here.
      I have been proposing we change direction and apply more Supply-Side Economics, which was what was called “The American Dream” because the USA was the first Supply-Side Economy although they gradually moved into other economic systems. Donald Trump has been trying to bring back Supply-Side with lower taxes and less regulation and the little he has done has boosted the economy greatly, although the USA may already be a lost cause. Obama was not the only president to bring strong elements of Fascism to the USA. (Fascism was designed by Mussolini as an economic system for Socialism in 1919. That is why most fascist leaders have been socialists, not just Hitler and Mussolini) The Obama Trans-Atlantic Partnership was going to be the biggest move into Fascism in Human History. Luckily Trump tore it up. Trump’s mistake is probably his Trade policy, not his domestic economics.
      If the Caribbean continues with the stupid economics we can only become poorer. All the mistaken leaders believe that we can be saved by continuing to put heavy tax burdens on the people and businesses so that they are “developing” the countries. How has that been working for us?
      As the writer has noticed, the governments actually end up with less, not more. The leaders may end up with more but not the countries. They should ask: Why is it that Trump has been able to increase the revenue in the USA by lowering taxes. Although he is attempting to stop the expensive wars, he has been instead using the CIA to attempt to overthrow foreign governments such as Bolivia, Iran, and elsewhere, as well as what the USA is doing in Hong Kong. According to Victoria Nuland it took Billions to overthrow the Ukraine but it was cheaper than a war.
      I hope that one day SVG and the Caribbean as a whole will realize we are going the wrong way.

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      1. DUKE i understand evrything you said and thanks for your insist . I am not an economist or scholar and never proclaimed to be one that knows it all ….. like some of the other people on here . (they know who they are) LOL, I give credit when credit is due and admit when I am wrong or simply just dont know .

      2. either way Duke taxes will increase and are you saying you would rather increase the taxes on the poor rather than the rich . focusing in supply woundnt be feasible to a small country and minimum resources such as SVG . One can make a very strong argument that Trump has and conducted many fascist style traits . Trump also benefited from Obamas policies that was put into place amid the financial recession before Trump took office . Yes Trump cut taxes on the business sector and rich , which resulted in positive stock markets but all of this is to the detriment of the poorer class and so called middle class who continue to feel the pinch and suffer brunt of these strategies. . The fact of the matter is the rich cannot reap success without the expense of the poor .
        Destination fare and taxes is naturally high to SVG because we are relatively new on the international accessibility scene with little to no competing airlines and hotel companies . Fares and taxes are driven down by competition within the same market . But because SVG is new “so to speak ” on the scene , it will take some time for business to take affect and cause prices to even out . We are essentially playing catch up
        Gov do not open busnesses , to cater to tourists or anyone for that matter . Its up the public to provide the tourists with activities and businesses to support. But as usual all we good for is to come on this forum and point fingers , listen commess , gossip , badmind (envy) our neighbors, hatred towards each other , criticize and play political sides while the foreign investors come in and takeover .

  8. I remember as a young man, ladies and folks used to go to other islands on shopping trips. That stopped a long time ago, it got so expensive to travel.

    It really is a socialist thing to make people pay so much tax that they can no longer live a life style that we all deserve.

    But whilst we have all been re-enslaved and chained up in one island, our leaders travel first class around the Caribbean and around the World meeting people which they can today communicate with modern technology without leaving their arm chairs.

    One man in Saint Vincent, his travelling bill last year was two million dollars.

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  9. Having read AL’s contribution, comes to mind is that fairy-tale “The goose that lays the golden eggs”! Yet it is not surprising for AL after all, is of the ULP persuasion and is quite obviously clueless in the realms of Economics.

    A word of advice AL, read up on “Comparative Sites,” “Supply and Demand” and Market Influence! Then ask yourself AL why the Communist Chinese are doing better capitalism than even the Americans today.

    Reply

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