CHTA President calls for “dynamic tax” to address high cost of air travel
CHTA President calls for “dynamic tax” to address high cost of air travel
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The President of the Caribbean Hotel and Tourism Association (CHTA) is recommending a tiered “dynamic taxation system” as a novel and potential solution to address ongoing concerns about the region’s high cost of air travel.

Calling for a flexible approach to levying airline taxes, CHTA’s President Nicola Madden-Greig said one of the major constraints facing Caribbean travel is the heavy burden of taxation, and governments could well consider successful revenue management tactics employed within the tourism and aviation sector.

Understanding that the full removal of taxes may be challenging, the CHTA president suggested a tax policy responsive to international travel demand seasonality. “For example, governments can affix a higher airline ticket tax in the peak winter season and lower taxes in the summer when demand is weak,” she said, adding that giving consumers better prices to drive visitation during the slow season could boost tourism, commerce and intra-regional VFR (Visiting Friends and Relatives) travel.

Speaking recently at IATA Caribbean Aviation Day in Grand Cayman, the successful Jamaican hotelier said the economics of such a variable policy might, in fact, result in a net gain in tax revenue to Caribbean governments. “As travel becomes more affordable and we stimulate more travel, this will result in more local spending, and consequently an increase in local tax collections,” she said, underscoring there will be an overall net benefit to the consumer thanks to lower ticket prices.

“I think it’s a concept that should be explored,” said Madden-Greig, who argued that a well-developed strategy could address diverse perspectives on taxation. “There’s a way to do it that allows for flexibility, so you still have taxation on the front end, but when you need to drive demand, you can reduce those taxes and make up the difference on the tail end,” she said. The taxation details, however, must be transparent, she warned.

Madden-Greig, the Jamaica-based Group Director of Marketing & Sales at The Courtleigh Hospitality Group, said she hopes to explore the “dynamic taxation strategy” at the upcoming Caribbean Travel Forum, taking place at CHTA’s Caribbean Travel Marketplace in San Juan, Puerto Rico, October 3 to 5, 2022.

“This could definitely answer the call for a reduction in taxes, but not a reduction necessarily all year-round,” the CHTA president explained, suggesting that policymakers could consider alternate tax regimes for regional and international flights to drive multi-destination and intra-regional travel.

She admitted that research is required on the technological options to implement the system: “It may not be an immediate solution, but it’s a solution we can work towards.”