Written evidence submitted by the Caribbean
Tourism Organisation (CTO)
comprises 33 member countries in the English, French, Spanish
and Dutch speaking Caribbean. It is headquartered in Barbados.
It has on its board the Ministers of Tourism of each of the 33
countries that it represents as well as private
sector allied members. The
current Chairman of the Board is the Minister of Tourism for St
Kitts and Nevis.
The CTO's role is to help establish
tourism as a sustainable means of social and economic development
for the Caribbean and to safeguard the industry's interests in
the region and internationally.
The following short submission from CTO observes
including "green" taxes, related to international travel
have a significant impact on other countries. In such cases their
effect should be fully taken into consideration before they are
introduced or reformed.
consideration should be given to the extra-territorial impact
of taxes such as Air Passenger Duty (APD) on the sustainable development
of other countries.
aviation is included in the EU Emissions Trading System (EU ETS)
in 2012, CO2 emissions will be covered by that scheme.
Air Passenger Duty (APD) will then become a general taxation measure
rather than a green one.
the UK Government's objectives for APD are revenue driven rather
than related to the environment, labelling APD as a green tax
is misleading to consumers including those travelling to the Caribbean
could be done to harness the opportunity to use UK expertise in
green technology to develop business partnership opportunities
in the Caribbean that relate to climate change.
1. Sustainable development and environmental
protection aspects of the UK Plan for Growth
The UK's Plan for Growth recognises Britain's expertise
in green technology and related industries. The Caribbean, like
many other developing regions, has a significant requirement for
green technology in relation to climate change adaptation. It
would benefit from collaboration with UK companies in this field.
There would be value in considering how UK companies might be
encouraged or incentivised to develop business partnership opportunities
overseas for the benefit of the UK companies and the Caribbean.
2. Shifting the burden of taxation from "goods"
(eg labour) to "bads" (eg emissions) needs to be better
considered when designing and introducing new taxes affecting
The UK Treasury's APD consultation document details
the Government's belief that market based approaches to emissions
such as the EU Emissions Trading System (EU ETS) are the best
way to address CO2 emissions. The CTO agrees with this
as an overall global approach but believes that such policies
should not be developed unilaterally. It hopes that a fair global
system will soon be developed that places all airlines and countries
on a level playing field. Without this, tourism dependent regions
such as the Caribbean that as a result of changing European policy
have had to migrate from preferential agricultural arrangements
to an industry that is based on its environment, tourism, will
be unfairly discriminated against.
If as UK Ministers now suggest APD is a revenue
raising rather than an environmental tool, then this is a tax
on people taking holidays, visiting friends and relatives or making
business trips or "goods", rather than emissions -
The Government states that it sees APD primarily
as a revenue raising measure. Therefore, the CTO does not believe
that APD should any longer be classified as a green tax as this
misleads consumers about the intention of the tax, which is essentially
a tax on people taking flights for the purpose of raising government
3. The scope for the tax system to create
modal shift from high carbon transportation to low carbon alternatives
are issues the government should be considering when developing
strategies for sustainable aviation
Over 70% of flights taken from the UK each year are
to short haul destinations in Europe. Given that some of these
short haul journeys are the only ones that can realistically be
replaced by lower carbon alternatives such as high speeds trains,
it seems perverse that the Air Passenger Duty on flights to short
haul destinations is significantly lower than to anywhere else.
There is no possible modal shift to lower carbon
transportation to the Caribbean as there is no way other than
by flying to reach the Caribbean - the most tourism dependent
region in the world. CTO has noted an increasing tendency for
passengers to route their flights via European hubs to avoid the
higher rates of APD. There is therefore the paradox that by increasing
rates beyond a certain point the UK may, by encouraging diversionary
measures, increase carbon emissions from international aviation.
This risk was recognised by the UK Parliament's Committee on Climate
Change in its December 2009 Report, which noted that "action
at European level is required in order to avoid leakage from UK
airports to hubs in other Member States".
4. The impact of the taxation system in general
on sustainable development
The CTO wishes to draw attention to the extraterritorial
impact of aviation taxation. The attached report produced by the
CTO on the impact of Air Passenger Duty was compiled at the request
of the UK government and presented in November 2010. It demonstrates
clearly, using World Bank Development Indicators, that the Caribbean
is the most tourism dependent region in the world.
The report, using a wide range of data, suggested
that since the 2009 significant increase in APD rates, tourism
arrivals to the Caribbean from the UK had decreased by as much
as 16% compared to increased arrivals to the Caribbean from all
other source markets.
There is no readily available economic substitute
for the tourism industry in the region. Caribbean economies depend
on tourism for government revenue through taxation on hotels and
other tourism related services, for employment, for economic growth
and GDP, and for investment attraction.
As many as one in four jobs in some Caribbean countries
are related to tourism, and in some countries tourism accounts
for as much as 80% of GDP. Therefore, anything that negatively
impacts the tourism industry and the UK companies which serve
it will have a serious impact on the sustainable development of
the region. This should be considered alongside the fact that
the Caribbean, although a low carbon emitter, is recognised as
one of the regions most at threat from climate change.
The CTO believes that the extra-territorial impact
- both economic and environmental - of tax policies related to
international travel or the environment needs to be carefully
considered in order to avoid unintended consequences.
In the case of APD, the unintended consequences are
already evident and it is to be hoped that the APD consultation
being undertaken by the UK Treasury will result in a fairer system
that will be implemented with haste.
UK policy on aviation and the environment is having
a detrimental impact on Caribbean development and the longer it
takes to reform the APD system, the greater the risk of serious
economic decline in the industry that now underwrites almost all
5. Green Investment Bank (GIB)
The CTO understands that the GIB fund will be used
to support low carbon investment. Given that income from taxes
that are labelled environmental (APD and the EU ETS), and in the
name of global carbon emissions reductions, CTO would urge consideration
be given to the GIB providing support to UK companies that wish
to develop innovative low carbon projects in developing regions
such as the Caribbean.
19 April 2011