Adrian Loveridge Column – Reduce Travel Related Taxes!

Mounting pressure is being brought by airlines and the United Kingdom travel trade onto the British Government to suspend, lower the rate or eliminate the Air Passenger Duty (APD), often referred to as ‘the highest rate of tax in the world on air passengers’. A statement from the UK Treasury has confirmed that a consultation on aviation tax reform would take place and hinted that APD could be suspended in the autumn budget amid increasing pressure to provide respite for airlines and the wider industry.

According to the Daily Mail, ‘at least 24 Members of Parliament (MP’s), including the chairman of the influential 1922 committee, Sir Graham Brady, are pressing chancellor Rishi Sunak to suspend APD until the end of summer 2021’. A suspension would allow airlines to entice holidaymakers with cheaper fares and save many of the 600 air routes lost as a result of the pandemic. MP Henry Smith, whose constituency includes London’s second airport, Gatwick, stated that ‘if we maintain our levels of air passenger duty, it will become a tax on recovery, as flying is the only viable route for investors and business people to approach and service existing markets’. The UK and Ireland Managing Director of Travel giant TUI, Andrew Flintham, warned ‘that many companies would not survive unless the current blunt approach was changed ‘ adding ‘if we enter the winter season without sensible solutions, the outlook only gets worse’.

Quite frankly, it defies logic, that our policymakers have not seen fit to temporarily reduce or eliminate the not one, but two, departure taxes plus VAT (Value Added Tax) on air tickets, together with removing the various additional tourism taxes and levies imposed before or from October 2018.

Looking at the cost of airfares from the UK to Barbados during this November as an example, where the lowest priced return economy ticket can still be purchased for as little GB Pounds 374. Over half (52 per cent) of that amount is made-up in taxes inflicted by both Governments. The APD element starts at GB Pounds 80 per person and the UK passenger service charge of GB Pounds 40.87. For the Barbados section, what Virgin Atlantic describes as Airport Service Charge of GB Pounds 52.70 plus a further Passenger Service Charge International of GB Pounds 20.70

So it does not take a rocket scientist to figure out what a massive difference a reduction in these add-on opportunist taxes could make in people’s economic ability to travel to our shores. The rationale is endlessly obvious. If you deter potential visitors in the first place by extracting high levels of taxation, then you obviously cannot collect further taxes on their accommodation, car rental, restaurant dining, shopping, activities, attractions, and so on.

While airlines across the globe are grounding hundreds of aircraft, slashing thousands of employees and fighting for their very survival, it seems almost incomprehensible that Governments are still extracting over half the cost of airfares in taxes.

55 comments


  • Yale University students studying from Barbados

    Liked by 1 person

  • @ Pachamama.

    Mr. Blog Master, please excuse my polite intrusion.

    Thanking you in advance Sir.

    PAC,

    Here’s your scripted agenda by Marion Madden, for your Annual General Meeting (AGM) of the Democratic Labour Party-Pressure Group (DLP):

    With thousands of people from the tourism and hospitality sector currently unemployed, an advertisement from one popular St Philip hotel (Crane Resort Barbados) for someone from overseas to fill a senior post has drawn the ire of some locals.

    This sh… been going on too Pumping long…….

    Like

  • So I see the boss lady and other regional leaders have decided to write off the LIAT debt. Hope the MOF remember to move it on we books from a loan to a bad debt!

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  • @ John A

    Plse explain to me, I am simple. Barbados owned 49 per cent of LIAT shares, which at one time it wanted to sell. But, according to government advisers, these shares were valued at $44m (I hope this figure is correct).
    Now, a few months later, this brilliant government, with some of the world’s leading economists as advisers, with the top lawyer in the Caribbean as the president, and with financial wizards as junior ministers, has decided to write off the debt.
    So a government in serious economic trouble has given away $44m as a gift to Mr Browne of Antigua. I missed the lesson on financial economics that taught this issue.

    Like

  • @ Hal

    Dem call this higher economics not for a newsman and a shop keeper to understand. But it sound something like this to me as a simpleton.

    Liat shares – $44M then you add the debt that you forgive say another $20M= 66M in de hole.

    You remember I committ to BU HANSARD? My comment to the boss lady which was ” take the 44M and run hard! ”

    At the poker table one would say she overplay she hand.

    Like

  • @ John A

    But when this government came to power it made a number of people redundant. It is reported that many of these people have not yet received their redundancy pay. Do you think those poor souls would have appreciated a few shares as a gift. I am sure Mr Browne would have given them something.
    Do you think this is advice from Dr Professor Sir Avinash Persaud?

    Like

  • @ Hal

    Well the short man would say something like this, wunna ready here goes. ” by extracating our self from Liat and its liability this has given us more fiscal space and the ability to continue with our austerity plan while persuing economic growth in a controlled manner with BERT at the centre of our economic growth plan.”

    In simple terms one could reply by saying ” what de ass he just say?” LOL

    Like


  • LIAT workers in Barbados to claim NIS unemployment benefits 


    KATRINA KING  CREATED : 28 AUGUST 2020BARBADOS NEWS 


    (FILE)Share to FacebookShare to TwitterShare to LinkedInShare to WhatsAppShare to MessengerShare to EmailShare to TelegramShare to More84


    Barbados-based employees of regional airline carrier LIAT will be able to claim unemployment benefits from the National Insurance Scheme (NIS). 


    The announcement came from the director of industrial relations and deputy general secretary of the Barbados Workers’ Union, Dwaine Paul at a media briefing at the BWU’s headquarters on Thursday.


    Paul stated that employees of the collapsed regional-based airline have been officially laid off and can proceed to claim for unemployment benefits from the National Insurance Department. 

    “We have had a discussion with the Government of Barbados through the Prime Minister and her team as it relates to how best we can address the situation for the LIAT workers. The Government has committed that all of the current measures that have been put in place to mitigate the impact on workers across Barbados will also be made available to those LIAT workers. Not only LIAT based operating workers but the LIAT team of pilots and cabin crew who operate from here but are not taxpayers or members of the NIS in Barbados,” Paul disclosed. 


    He indicated that the staff of the collapsed regional airline found themselves in “no man’s land” as more than 100 employees around the Caribbean have not been paid and were also not paid for the last four months of the pandemic. 


    The Antiguan Government has informed employees and trade unions that they will pay staff 50 per cent of their wages for July but there has been no discussion with shareholders or administration on the outstanding wages. 

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  • @ John A

    Can BERT dance in that fiscal space? Can Persaud (Sir Dr Professor Avi Persaud) dance?

    Like

  • @ DAVID

    In bajan terms dem so brek dem cant even find the severance payment money.

    Like

  • @John A

    It is no secret Barbados like many open economies in the region and across the world are in a bad place.

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  • @ Hal

    I said before and i will say again all the pretty talk and politicing will only get anyone so far. When ever done if the plan is faulty it will not work. That is why i said to we boss lady ” take de offer and run hard.” It was clear to anyone with a trace of business sence that it would of been down hill from there. Its like a house dont care how much it cost you to buy it only worth what someone will pay for it. As the fellows on Wall Street would say ” that investment was underwater from inception.”

    Like

  • @ LIAT

    (1974) Ltd, formerly known as Leeward Islands Air Transport and operating as simply LIAT, was a regional airline headquartered in Antigua and Barbuda that operated…
    Commenced operations: 20 October 1974
    Destinations: 15
    Fleet size: 10
    Founded: 20 October 1956 (as Leeward Islands Air.

    When our Tourism Minister and the Prime Minister spoke of reopening the borders, they eyed Canadian and American dollars and British pounds.

    Even in the resumption of regular commercial passenger service, no Caribbean airline was to be found in the pantheon. There were cheers for Air Canada and Virgin Atlantic, British Airways and JetBlue and deafening silence on the airline the Government of Barbados actually owns.

    LIAT and it’s debt is dead. Call it whatever you wish.

    May its long profitless journey Rest In Peace in de year 2020….

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  • @ David

    More the reason why a prudent board would of made provision to put aside the severance money even if it increased the losses. The losses are the shareholders liability but the severance is the companies. Speaks quantum to the standard of the board.

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  • @John A

    As you may recall LIAT management also invested the pension fund belonging to the Pilots in CLICO. That was all she wrote.

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  • @ david

    What start wrong end wrong ask any old Bajan

    Liked by 1 person

  • The LIAT experience and the way we treat Caribbean airlines goes right to the heart of who we are. White is all aright, black stand back. We said that in the 1960s and it is still relevant.
    We have a president who prefers to speak to CNN or the BBC than to CBC. The audience, dear boy. The right audience.

    Like

  • We have a Prime Minister with the ability to force her way into international media space to sell the Barbados Welcome Stamp initiative and voice concerns of SIDS in the international arena.

    Like

  • We have a president who prefers to speak to CNN or the BBC than to CBC. The audience, dear boy. The right audience.

    xxxxxxxxxxxxxxxxxxxxxxxxxxx

    @ Hal

    YOU ARE BEING TOO TOUGH ON THE OVERWEIGHT WOMAN WHO IS TRYING HARD TO PUNCH OVER HER WEIGHT.

    Like

  • We have a Prime Minister with the ability to force her way into international media space to sell the Barbados Welcome Stamp initiative and voice concerns of SIDS in the international arena.

    Can you be any more obsequious?

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  • @Dullard

    Is it not refreshing to have a prime minister who does not hide from the media?

    Like

  • @ David
    Absolutely. But to what end? You said:

    We have a Prime Minister with the ability to force her way into international media space to sell the Barbados Welcome Stamp initiative and voice concerns of SIDS in the international arena.

    The PM isn’t forcing her way into “international media space”. Her PR people are facilitating much of that.
    Also the PM “voicing concerns of SIDS in the international arena” is a nice euphemism for cap-in-hand.
    Is the number of CNN interviews the new benchmark for the government’s performance?

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  • And after all of these appearances and loquacious conversations on CNN and other international media what are the direct consequential and tangible benefits that result? Not a thing. Just bragging rights. Unbelievable we still fall for that politricks in 2020

    The citizenry are still in the same mess without solutions.

    Sad reality unfortunately

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  • @Dullard

    Do not be ridiculous. The PM doing interviews with the international press is one activity in many. If you do not agree with it that is fine too.

    >

    Like

  • @ Hal
    @ John A
    Can we have a referendum and let the public decide if there is still need for Prof. Persuad; Dr. Mascoll and Dr. Greenidge?

    Like

  • @ William

    What is really sad is that in the middle of a crisis the president is too proud (arrogant?) to reach out to other views about how to rescue the economy and develop the rest of the nation. We are not a one-dimensional society.
    This small group operates like a Mafia, they think a 30:0 election victory gives them ownership of the nation. Anyhow, today is the big day. I got my popcorn, my Diet Coke and I am waiting.

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  • John ASeptember 14, 2020 3:55 PM @ Hal Dem call this higher economics not for a newsman and a shop keeper to understand. But it sound something like this to me as a simpleton. Liat shares – $44M then you add the debt that you forgive say another $20M= 66M in de hole. You remember I committ to BU HANSARD? My comment to the boss lady which was ” take the 44M and run hard! ”

    ++++++

    Not sure how an insolvent company could be worth more than $1. But if the experts said so, then it must be so. Re YOUR advice, run hard. For sure, do like Usain! Pity that they did not.

    On the severance liability, I agree with you there too. Poor governance by the Board. Then, adding insult to injury, investing in CLICO? Stupse. Where these Directors come from? I was tempted to say Brumley. But Brumley folk have commonsense, street smarts. They know better.

    Only high falutin, keep up with the Smith and Joneses would pompasette about being Directorships and investing in garbage.

    Like

  • William SkinnerSeptember 14, 2020 10:58 PM @ Hal @ John A Can we have a referendum and let the public decide if there is still need for Prof. Persuad; Dr. Mascoll and Dr. Greenidge?

    ++++

    Contrary to what you may think, Mascoll and Greenidge do know what they are doing. Politics can also get in the way of action.

    On the other, what happened to Four Seasons? Buhbim see a penny of that money? Who owns the land?

    Like

  • @Crusoe

    I have a lot of respect for Dr Mascoll and believe he is a better public economist than Arthur was. I do not know of Dr Greenidge’s work, apart from his central bank and IMF experience, which do not cut it. With Prof Dr Sir Avi Persaud, the jury is out.
    He gets appointed to committees and working groups, but all his work (most?) is co-authorships. But I take your point; it is very difficult to be an adviser to any Barbadian politician, especially one who is convinced she is the cleverest person in the room.

    Like

  • @ Crusoe
    @ William

    I dont kmow who in their right mind would have advised the PM not to take the money from Antigua and walk away. The company as a trading entity is worth nothing based on its losses and we know the only reason Browne wanted it was to protect Antiguan jobs and his personal political ego. It was one of the biggest blunders this goverment has made to date not to of accepted the offer and walked away.

    Like

  • @John A

    It maybe inaccurate to convey Antigua offered to buy Barbados shares in LIAT, the term used was expressed an interest which they took from the table after saying a loan for 49 million was sourced to pump capital into LIAT. Also there were conditions attached to the expression of interest.

    https://barbadostoday.bb/2019/10/08/antigua-drops-demand-for-liat-shares/

    Like

  • @David

    How ever you dress it up the opportunity was there to get out and we didnt take it. Any good accountant would of told the PM take even $1 for the shares if that would release you from the liability. Point is we had the opportunity to free ourselves from it and didnt use it. If you recall Browne made an offer for the shares and we said we wanted more than that. Only God could tell you based on what we thought it was worth more.

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  • @John A

    How do we know it would have released Barbados from all liability?

    Like

  • @david

    If i sell you my shares in a company i no longer have any legal or financial interest in the company. Both the assett and liability factors are used to arrive at the offer the buyer would make for my shares. So if for example you offered me a $1 for my shares, i might say look if he taking over my debt which i might never live to see repaid, let me take the dollar and be done with it.

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  • @ John A

    Plse, always consider who you are talking to. If any idiot, even the government of Barbados, sells a company for Bds$1, that of course will include all liabilities, unless they are taking advice from the chairman. The transfer of responsibilities is reflected in the price.

    Like

  • @ david.

    For the sake of clarity let me explain simply how a share value would work using 2 simple example.

    Shares in company A are for sale. They sell $1 million dollars a year and have no debt with $400,000 in cash on the bank

    Shares in company B are also for sale. They also sell $1 million dollars a year but owe the bank $200,000 and have no money on the bank in reserves.

    So even if company A sold the same as company B and made the same annual profit. Company As stronger financial position and liquidity would make their shares more expensive.

    Hope this helps all to understand a bit better how a share value is arrived at.

    Like

  • @ Hal

    I tried above to explain in simple terms share valuation based on assett and liability factors. I think the mistake many make is they look at the size of a company and say the shares should be worth more than the shares of a smaller company, not understanding the factors used for valuation.

    Like

  • If you want a clear example of this in the region look at what happened when Sabga bought out Alstons. Small cash strong fish swallowed a starve out whale!

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  • @John A

    The point you are missing is that we do not know what was the expression of interest to buy had attached as a precondition. Bear in mind LIAT 1974 is a company with bylaws etc to government its business.

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  • @David

    That has nothing to do with arriving at a share value or share offer. This is based solely on finacial factors such as assett base, liability, profitability etc. Regardless of company structure the process for valuation is the same worldwide.

    Like

  • @John A

    Where we will have to disagree is how practical was the offer to lead to sale. We do not know. Your argument is built on unknowns and theoreticals.

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  • @ David

    My arguement is based on globally accpeted business practice. Although i have no doubt many would come with the tired old island excuse of ” yes but you got to look at LIAT different.” Yes well tell any potential buyer that then. Lol

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  • @ John A

    Companies do not have by-laws. Only governments and statutory bodies do, including local government. The liabilities, including pensions and redundancies, will become the responsibility of the new owners under any such arrangement.

    Like

  • Your argument is built on unknowns and theoreticals.
    So the basic principles of company valuation are different in BIm, right.

    Like

  • @ Hal

    That is what i am trying to explain in that when one buys shares you are buying both the good and the bad when you purchase. In other words you cant buy the assetts and leave the liabilities with the old owner.

    I dont know how else to explain it so you may have better luck than me.

    Like

  • @ John A

    Under normal circumstances all of us will ignore the chairman. The confidence of his ignorance is amazing. I do not know the guy, but he talks as if he went to some US university, the Donald Trump University, and got a bit of paper in nonsense.
    On the other hand, this is Barbados; we do things differently. Just look t how this top notch government messed up our LIAT shares, a waste of taxpayers’ money.
    And it is not just LIAT, right across the public finances they mess up, consistently, with their legal an economic knowledge, it is a disgrace.
    In any case, only another couple hours now before the Queen’s Speech. Watch out, get your pop corn and take notes. Is CBC going to have expert studio guests explaining the new proposals as we go along?

    Like

  • @ Dullard

    So it would appear here in Bim things are different. But isnt it the “yes but Barbados different ” arguement that got us in this mess to begin with?

    What is clear is that the public dont understand the difference in selling a share to selling a bicycle say.

    What i mean is if a company has a total share offering of 100 shares and I own 10, then i own 1/10th of the company both the good and bad. If I sell my shares then I old 0/10 of the company both good and bad.

    Maybe you can explain it better than i can as i clealry am not getting my point over.

    Like

  • @ Hal

    Lord thanks for reminding me, i have to watch and see the new economic plan for our recovery that will ensure that tourism makes up no more than 50% of our GDP!

    Well a man can hope cant he?

    Like

  • Hal is not correct at 10:07 am, September 15, 2020, when he argues: “Companies do not have by-laws. Only governments and statutory bodies do, including local government”.

    Even if it is not always mandatory, depending on jurisdiction, it is advisable. Here is a Canadian example from Ahlstrom Wright, Barristers & Solicitors:

    ‘As far as the word “bylaw” goes, most people tend to think of them as the rules that a city or town creates and adheres to. In some capacity one wouldn’t be wrong in thinking this, because technically a municipality is a corporation. Corporate bylaws are simply the rules of the corporation. Corporate bylaws are established by the people who own and manage it during the start of the corporation process….A city’s bylaws govern how the city and its residents interact with each other, themselves and outside actors. Corporate bylaws operate in a similar way. Corporate bylaws are the rules established to run the inner workings of the corporation, including the relationships between the Corporation, its shareholders, directors, officers and many others.’

    Like

  • @ Willie

    You are talking about governance. By-laws affect the general public.

    Like

  • @ Hal

    From the USA per WONDER.LEGAL:
    “Corporate Bylaws are essentially the “rules” for how a corporation must operate…Most states require these documents at the beginning of the life of a corporation. Articles of Incorporation are often the very first document filed to begin a new corporate business. The Articles must be filed with the state. Shortly thereafter, however, or around the same time, many corporations put together their Corporate Bylaws. Bylaws are the document that underlies the entire operational structure of a corporation…Bylaws cover the major aspects of a corporate business: shareholders, directors, officers, and meeting information…Corporate Bylaws can also be drafted for a non-profit corporation, which contain many of the same provisions except those relating to shareholders”.

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  • LIAT has been bankrupt for DECADES. The taxpayers of the shareholder countries propped it up BIG TIME.

    What caused LIAT to go into liquidation may be found in one word – “POLITICIANS”.

    For DECADES I and other professionals have been telling our “leaders” and the Press that things MUST change at LIAT, but nothing was ever done, the politicians liked things just the way they were.

    Most of Board and Management were politically appointed – incompetent knuckleheads with zero knowledge or experience in aviation anywhere who were Party Faithful or who were owed favours. The managers who were promoted to their own levels of supreme incompetence from within had no other points of reference or experience other than “at LIAT we have always done it this way”.

    Even the last 15 years or so the usually rotating shareholder Chairman wheel seems to have broken off – power-mad Marxist Comrade Fat Ralph held it and steadfastly refused all efforts at change.

    COVID was just the final straw on LIAT’s back that our “leaders” could not ignore — and the pandemic has exposed every company in every industry around the globe that was no longer viable.

    Bear in mind also that LIAT has not published its annual accounts for at least 40 years. This is a PUBLIC TAXPAYER-SUPPORTED REGIONAL CORPORATION that has received HUNDREDS OF MILLIONS of US dollars in taxpayer funding, yet not a single politician, Board member or manager thought it fit that those taxpayers should have access to accounts or even to ask questions.

    So, here is my question: How many hundreds of millions of US dollars were siphoned off into private pockets over the decades?

    Final comments: I understand politicians are bewildered that the public perception is that they are all liars and thieves. Should we not expect that political promises made to gain votes should be kept? And at what point does a taxpayer have the right to be outraged at the theft being perpetrated by those they trusted and voted for?

    I also understand that all politicians should not be tarred with the same brush, but when one Party wins an election and then refuses to take legal action against the previous ruling Party who CLEARLY operated like bandits and robbed the Treasury, what is the rationale? Is it that they intend to steal just as much and if they imprison the former lot then they will themselves be imprisoned when they are thrown out?

    Tit for tat is not a viable response to a taxpayer whose pockets are being bled dry year after year, decade after decade.

    LIAT is dead. Long live LIAT.

    Like

  • Present govt cannot lower the taxes levied on the tourism industry
    The tourist are not coming and in order for the industry to survive govt has to collect revenue which most likely would return to the big belly heads to help fill the coffers which they themselves claim is empty
    So saying at a time when the tourist industry is asking govt for funding to do away with the taxes is foolishness
    Maybe after the industry rebounds that call should be made
    In meantime ask what can hoteliers do that can reinvigorate the industry in one of its worst time

    Like

  • Mariposa, you seem to have lost the point. If we cannot restore airlift to reasonable numbers there is absolutely NOTHING the hoteliers can do. Please re-read my comments and then respond.

    Like

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