Antigua and Barbuda Tourism Minister Henry Charles Fernandez has a simple message for the Caribbean government.
He wants regional leaders to be as committed to regional connectivity as they are willing to pay international airlines to fly to their countries, often “half-empty”.
“And so, we have to convince our leaders, and by extension our people who put our leaders and themselves there, of the importance of this regional connection,” Fernandez said, amid ongoing debate in the Caribbean over taxes that regional governments impose on the aviation sector. and visitor arrivals
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Fernandez made his position known while participating in a panel on “Multi-Destination Tourism” as part of the Caribbean Tourism Organization (CTO) Business Meetings and Caribbean Aviation Day conference held last week.
The event was jointly organized by the Barbados-based CTO, the Cayman Islands government and the International Air Transport Association (IATA).
Fernandez, who also has ministerial responsibility for economic development, said it was unacceptable for Caribbean governments to pay a US carrier to fly to their countries, “often half empty, but then say I have nothing to put on a regional carrier…
“There has to be a commitment that we have to do it. We have to do it,” Fernandez said, noting “everything costs money, but we have to look below what happens as people travel through the islands.
But he said that despite this situation, the region should be willing to consider whether reduced taxes would translate into higher visitor arrivals, which would mean more money from visitor spending.
Economist Marla Dukharan, who also took part in the panel discussion, said government ministers are best placed to talk about whether their countries can afford to cut aviation taxes, and if so, by what percentage.
She, however, said there are already “pockets”, such as the ABC Islands – Aruba, Bonaire and Curacao – as well as Dominica, Martinique and Guadeloupe, which have multi-destination tourism.
“You have this happening and maybe this could be the answer – small pockets as opposed to a big pocket… It’s really what we have to lose. Let’s look at that compared to what we have to win.”
Dukharan said the Caribbean is “the most open region in the world” in terms of exports as a percentage of gross domestic product (GDP) and “that’s why our economies depend so much on connectivity, air and sea connectivity”.
But she noted that the Caribbean is also the most tourism-dependent region in the world.
“And so, for that reason, for the tourism sector, we have to solve this problem,” she said, adding that according to the Caribbean Policy Research Institute in Jamaica, in 2019, the tourism sector directly contributed a third of the region’s GDP. , 53 percent of total exports, 43 percent of total employment and 40 percent of informally employed, noting that 40 percent of all jobs in the Caribbean are in the informal sector.
“So this sector should do well,” said Dukharan, adding that the Caribbean is also the most expensive tourist destination in the world.
To illustrate, the economist said she went to the Expedia travel site and picked a random date – October 23 to 29th — and looked at flights from Barbados to various destinations.
“We have more than 30, 40, and in some cases more, percent of the total cost of tickets that is just taxes,” Durkaran said, adding that it’s “only a piece of the pie, but it’s an important part of the pie..
“This is something that we absolutely need to address in this region because I feel like instead of being a race to the bottom, we’re a race to the top as it relates to taxes in this region,” she said, adding that the airline regional is important not only for tourism, but also because the region is the most open in the world.
“We really need to think very seriously about this tax structure… And those who are more profitable are the ones who have to shoulder a relatively larger share of taxes than those who are less profitable when you tax the ticket, Dukaran said. , adding that she did not know which sector it is about – whether it is aviation, accommodation or something else.
“You’re taxing everyone at the destination equally, whether you’re a taxi driver or a five-star hotel – and that doesn’t make sense. And so that’s something that I think we need to get right: the progressive nature of the tax regime as opposed to what I see as a regressive tax regime.”
Jamaica’s tourism minister, Edmund Bartlett, acknowledged that the tax discussion is an important discussion that has been long overdue, recalling that in 2010, there was a discussion in the Cayman Islands that focused on convergence in the northern Caribbean.
He said panel tourism is a very consumption driven activity.
Bartlett said global economies that had relied on minerals, oil and other commodities are turning to tourism.
“Dubai is your best example,” he said, adding that Saudi Arabia is spending huge sums of money to create the Red Sea and Neon products to build Jeddah “in a way you would never imagine.”
Bartlett said the coronavirus (COVID-19) pandemic has given the Caribbean the opportunity to reimagine tourism.
“I am not saying that taxes should be eliminated. I say taxes need to be reconfigured. In other words, instead of taxing the visitor before they arrive, in other words, tax the import, tax it when it comes in as an export, because it’s consumption.
Newly appointed CTO chairman, Cayman Islands Tourism Minister Kenneth Bryan says he doesn’t think it’s “right for us to put all the pressure on my political colleagues.
“There are other stakeholders in the room that also have to make some compromises here because we have our constituents to take care of.”
Bryan and his newly appointed CTO board chair, Rosa Harris, Cayman Islands director of tourism were present last Wednesday when IATA Vice President for the Americas, Peter Cerdá, said travel and tourism in this sector needs “more than just nice words and statements.
“We need action,” Cerdá told the Caribbean Aviation Day conference as he presented a case for marketing the region as a single destination.
Barbados Tourism Minister Lisa Cummins was concerned that 56 percent of the cost of an airline ticket to Barbados is made up of taxes, although she sought to explain the reason for the situation.
“But let’s break down where the fees and charges go domestically, because the things we want and the things we need to be able to put a price on it. This helps to support airlines where we have incentive programs and cooperative marketing programs in source markets,” she argued.
Cedar reportedly flies from Port of Spain to Barbados, taxes and fees make up 40 percent of ticket prices. In comparison, Lima, Peru to Cancun, Mexico, another beach destination, taxes and fees represent only 23 percent.
Cummins suggested that “maybe” taxes should be reduced.
The Cayman Islands tourism minister said the pocket system could work along liner lines, for example, noting that Dutch, English, French and Spanish are spoken among the CTO’s 24 member destinations.
“And I personally think — just my preliminary analysis — that this pocket approach is probably what’s going to be best. And then the main centers can work together.”
But Bartlett said it’s important to understand what’s required to ensure a multi-destination strategy works.
“First of all, from the side of the public sector, we ministers, politicians and then, of course, the private sector because the product must also be created.
You can’t have too many destinations just trying to connect. Connect with what? So we have to develop a Caribbean product because there is a marketing dimension to all of this. And so the private sector teams need to come together to now create a product at one price so we can package it and go to market together as one,” Bartlett said.
CMC/
