The UK Finance Bill containing the provision to band Air Passenger Duty (APD) on all flights departing the United Kingdom received Royal Assent on July 21 after a short formal debate in the House of Lords.
The proposed banding system will come into force on November 1, 2009. This places the Caribbean in band C and the US in a lower tax band B.
Despite Britain having passed the measure into law there is still an opportunity to have the banding modified in the 2010/11 UK budget so that the Caribbean has parity with the US. Any such change would run from November 1, 2010 the date when there is due to be a significant increase in the tax.
Interestingly, the retiring British High Commissioner to Barbados told the Caribbean Media Corporation on September 20. “I think there is an argument that the region can put forward and I am glad to encourage them to do so. At the end of the day, it is possible that they (the UK Treasury) may be able to look again at that particular issue of the banding structure,”
There will also be other industry wide opportunities to lobby with airlines, tour operators and industry groups in the UK to make clear to the UK Government and Opposition that the whole measure is damaging and needs review.
Background
The Caribbean lost the first round of lobbying on APD but severely jolted the UK Government which together with MPs and Peers came to recognise that the banding for the Caribbean is potentially a UK election issue for the Diaspora (a General Election in the UK is widely expected to be called for May 2010).
The Conservative Party Shadow Transport Secretary has described APD reform as "urgent" but according to media reports is holding out little hope of any change in 2010. The Conservative Party continue to argue for a per plane tax as an alternative.
UK Parliamentarians are now fully re-engaged in the Party conference season. (Liberal Democrats 19 - 23 September, 2009, Bournemouth; Labour Party 27 September – 1 October, Brighton; Conservative Party: 5 - 8 October, 2009, Manchester). The UK Parliament returns after its summer recess on October 12, 2009. This is therefore the key moment to lobby.
In October the travel and aviation industry in the UK will begin to lobby strenuously to have APD amended or rescinded.
The next opportunity to effect change will come in November in the pre-budget statement that sets the scene for the next UK budget and the content of the 2010/11 Finance Bill. This is expected to be an election oriented statement in which Government will seek to appeal to various interest groups, and will establish the parameters for the future fiscal approach by the Conservative and Liberal Democrats, through their response, should the former become the government (as the opinion polls suggest) or as some believe the latter hold the balance of power.
Action to take
In this light Caribbean Governments may wish to take the following actions:
Try to secure from the UK Government language in the November Budget statement that proposes re-banding the Caribbean at the same level as the US;
Seek a separate commitment from the UK Conservative and Liberal Democratic Parties to do the same if in a position of power, if the measure remains in force;
Encourage British MPs and Peers to indicate to the UK Government that APD is discriminatory against the Caribbean and its Diaspora and damaging relations;
Work with the broader UK travel industry to try to secure the abolition of APD.
To this end Caribbean Governments should consider:
Making direct and written representations to the British Government for a review of the banding for the Caribbean in the 2010/11 budget (draft outline letter attached);
Making direct and written representations to the two main opposition parties to enquire what their policy is on APD and APD Banding while making all of the key points on APD including those about the economic effects and Diaspora concerns. (draft outline letter attached);
Continue to campaign through High Commissions and Embassies with the Diaspora and Diaspora related travel agents;
Have well disposed MPs and Peers ask Parliamentary questions about the possibility of a change of approach in Caribbean banding in the Budget Statement in November;
Undertake Ministerial led APD lobbying activity around the time of World Travel Market in co-ordination with CTO.
The outline draft letters require adaptation to meet national requirements and concerns. The first provides a basis for points governments might like to make to the British Government in writing. The second is intended for the principal opposition parties and seeks to establish enquiring about their policy on APD while making them aware of Caribbean concerns.
Outline Government Letters to the UK Government
How to find your local MP and other information on APD
Letter to MP from Caribbean Constituents