By Orville Williams
Prime Minister Gaston Browne has announced his intention to lobby further for a reduction in regional air travel taxes, when he takes on the role of Caricom chairman next month.
The issue of high travel taxes has been a vexing one for many Caribbean nationals and, despite many public pleas and acknowledgement on the part of regional officials, there has been no significant movement in this regard for several years.
In late 2019, a group called the ‘Caribbean Citizens Against High Intra-Regional Travel Taxes’ started a petition for a tax reduction that gathered nearly 20,000 signatures, according to reports.
The group also indicated in a subsequent letter to Caricom leaders that studies have shown intraregional travel would increase considerably if the governments were to reduce the appropriate taxes, fees and charges (TFCs).
Prime Minister Browne – who was said to be one of the first regional leaders to respond to the group’s letter back then – revealed during a discussion on Twitter on the weekend that he would be assuming the leadership of Caricom next month, and that advocating for the reduction of the travel taxes would be on his agenda.
He insisted that the ongoing pandemic has provided a window for that reduction to be attempted, due to the suspension of financial commitments for most regional airports.
“When you look at the fact that Covid has literally provided the opportunity for us to have a debt standstill, in that most of these airport loans are not being serviced at this time; the fact too that there’s practically little revenue from intraregional travel, I’m of the view – I raised this point at the level of the OECS and certainly will be driving it home when I take over the chairmanship of Caricom in July – that now is the time for us to cut the tax, even by 50 percent.
“I do accept that you may not be able to determine the elasticity of pricing on travel demand, because intraregional travel will remain relatively low during this period of Covid, but the fact that you’re hardly collecting anything at this point, it is not revenue you’re giving away. You can’t give away what you’re not earning.”
Many would argue that Browne’s assertions should be taken with a grain of salt, given the statements made by several regional leaders on the matter in the past have not resulted in any tangible outcomes.
The PM accepted that moves should have been made long ago to rectify the situation, but pointed to some issues that prevented Antigua and Barbuda and other territories from taking the plunge.
“At the time it represented a challenge, even for Antigua and Barbuda, because our travel taxes for example were securing a loan of US$94 million that was actually incurred by the former administration.
“So, to cut [the taxes] by 50 percent would have been difficult, even though we were looking at the possibility of even reducing the travel taxes by about 25 percent at the time. There are other governments within the region that have similar hypothecation of revenue which would have limited the extent to which they could cut travel taxes, because these revenues were previously assigned,” Browne explained.
He said, however, the attitudes toward the potential reduction are much more positive at this point, with many benefits to be gained by all involved.
“I can tell you that my colleagues are looking at it seriously and I believe that we should be able to convince them to do something now. It could even be for a temporary period, if we say that we do it between now and the end of the year…I have no doubt [that] it will result in incremental revenues and at the same time, give us – not quite a fully accurate reflection, but – some idea of the price elasticity of these tickets, which obviously carry a heavy component in terms of government taxes.
“I’m of the view too, that it is one of the ways to incentivise fully vaccinated persons. We can have a bubble involving fully vaccinated persons, to allow them to travel intra-regionally and without any quarantine.
“There are multiple benefits [to] introducing such a policy, so I accept that it’s something that should have been done before. I believe that, again, Covid has given us the opportunity to do it now and we ought to do so.”
According to the organiser of the discussion, Kevz Politics, PM Browne’s participation on Twitter’s newest service – Spaces – was history-making, as he became the first Caricom head of government to utilise the service.