Government finally adjusts Airport Development Charge

It was always viewed by many as a “bad” tax with some legal minds quietly suggesting that there may even be some “illegality” to it. We are referring to the airport development tax which was instituted by the former UWP administration in May, 2011 ahead of the proposed construction of a “new” Hewanorra International Airport. The project has been one shrouded in political controversy from the start. However, even before the commencement of any construction this airport tax associated with the development was being collected at both airports here, GFL Charles in Castries and Hewannora in the south, increasing quite significantly the cost of travel to and from Saint Lucia. With the island heavily dependent on tourism, some officials agree that the tax has hurt travel and tourism, particularly within the Caribbean market.
As it stands right now tickets purchased to travel to and from Saint Lucia contain four separate taxes including EC$35 departure tax/EC$54 for non-residents and the controversial Airport Development Tax of US$35 (approximately EC$93.00). In some cases the cost of an actual ticket to travel within the region is lower than the added cost of all the taxes.
When in opposition the Saint Lucia Labour Party referred to the tax as one of “deception and stealth,” charging that the Bill creating it was never circulated to the Opposition ahead of the debate on the tax.
For months after assuming office in November of 2011, no further reference was made of the Airport Tax by this new administration. On April 12, 2012, I asked Tourism Minister about the Airport tax given the stance taken on it by his Government whilst in opposition. “This is being reviewed. In fact Government is looking at it amongst a number of other things. As with anything else anytime a government comes in we need to look at the various initiatives, see what the impact has been, not just in terms of revenue generation, but see if there has been any issues concerning declines that we could probably associate with it.
“Yes, it is being looked at, it is being looked at amongst other things because one of the things that the Government is in fact reviewing is the whole issue concerning the airport, its structure, to see how best we can probably bring it into fruition,” Lorne Theophilus said. Quizzed further about the impact the tax was having on travel and tourism, the minister whilst admitting that travel was now more costly stated that the travel numbers were up.
“And the forecast for
the year keep on showing that our numbers are up,” he stated.
In May 2012, during the budget presentation, Prime Minister and Minister of Finance Dr. Kenny Anthony presented the “good” news that many had been waiting for. Ahead of his announcement this is what the PM said; “in Opposition, we had difficulty with this tax. In our view, this tax is unconscionable at this time especially, given our challenges in increasing stay over tourism arrivals. It is a tax to pay for an event in the future. Not one block has been put into the ground to justify the tax.” Dr. Anthony then went on; “the Government, therefore, will suspend the application of the section of the Act authorizing the tax for the time being. This will give immediate relief to travelers.”
“I am advised that since the imposition of the tax, SLASPA has collected US$7.7 million dollars thus far and it is anticipated to collect a total of US$10 million for the year 2011/12.”
However the immediacy of relief to travelers never took effect, even as the Saint Lucian Prime Minister and other CARICOM leaders were battling a travel tax on passengers from the UK to the Caribbean. No word yet as to how much revenue the tax had brought in between the time the Prime Minister made his announcement in May to this date.
On Monday February 18, 2013 however a notice was circulated by the The Saint Lucia Air and Sea Ports Authority (SLASPA) announcing the reduction of the tax. What this in essence means is that the tax has not been abolished, but suspended until further notice, giving Cabinet the authority to increase this tax at any-time they see fit or once the redevelopment of the airport commences as the Prime Minister had promised last year.
Incidentally on the same date that the Statutory Instrument spoken of was enacted February 11, 2013, a report was published on the debilitating UK passenger tax. The report noted that scrapping the controversial Air Passenger Duty (APD) in the UK, which has negatively impacted on the tourism industry throughout the Caribbean, could generate 60,000 jobs by 2020. The report commissioned by four airlines, British Airways, EasyJet, Ryanair and Virgin Atlantic, says this is also expected to boost gross domestic product (GDP) by almost one per cent.
The Government of Saint Lucia has refused to say if they were pressured into reducing the Airport Development Tax here
in light of negotiations to have the UK ADP abolished and ongoing attempts to attract more flights into the island.