Passenger taxation is ‘swamp taxation’ because no one besides the tax receiver wants it, and it sucks. They may opt for visiting a different island destination that doesn’t have the taxes, yet does have the same sun, the beaches and the palm trees. Plus, the new discovery may even have more to offer and worth a repeat visit.
ICAO is the International Civil Aviation Organization, a specialized agency of the United Nations. For one, it fosters the planning and development of international air transport to ensure safe and orderly growth.
ICAO has clear policies on taxation and Member States are urged to apply ICAO policies on taxation in regulatory practices. ICAO Assembly Resolutions have repeatedly urged Member States to follow the ICAO policies on taxation and not to impose taxes on the sale or use of international air transport.
Despite these policies, the past decade has seen an unprecedented proliferation of taxes levied on air passenger tickets in the region. This trend is causing serious concerns and has a negative impact on the sustainable development of air transport, which, ultimately, negatively impacts the tourism industry and the overall national economic development.
At a CARIBAVIA conference, Vincent Vanderpool-Wallace, former Minister of Aviation and Tourism of the Bahamas and former executive of the Caribbean Tourism Organization, highlighted what he called the “madness” of some leaders who “shoot themselves in the head” by trying to implement airport fees that actually become counterproductive to the economy as a whole.
He used the example of the Bahamas that at one point was so affordable to travel to, Casinos would fly in patrons for as little as $99 knowing they would spend more. However, with the introduction of many airport fees and related taxes, the $99 ticket now costs more like $249, making it much less affordable to implement such incentives. He added that taxes inflate the prices and tourists will think twice before traveling to the destination. He cautioned governments against introducing fees that would figuratively be equivalent to “shooting themselves in the head.”
In a recent comment, he asserted that there is strong evidence that we have managed to convert some "hotel visitors" to cruise passengers by raising taxes on air tickets substantially and leaving taxes on cruises the same. It is now less expensive to take a short cruise than the cost of a round trip airline ticket for that short trip. In essence it means that passengers would leave more money on the cruise ships benefitting the cruise operators, rather than spending it on shore at destinations.
Caribbean governments are well advised that before making a decision, an independent evaluation should be made on the impact of passenger or airport taxation. A ‘neat’ idea to get some extra money in the coffers, may turn out to be a monkeynomics. What plays a crucial role and contributes significantly to an economy must not hindered by ineffective government taxation.
Cdr. Bud Slabbaert is the Chairman and Coordinator of CARIBAVIA, the Caribbean Aviation Meetup, an annual result and solution oriented conference for stakeholders of ‘airlift’ in the Caribbean. Mr. Slabbaert’s background is accentuated by aviation business development, strategic communication, and journalism. In accordance with his study of Economy in his younger years in Germany, he is authorized to carry the title of ‘State Certified Economist’