Taxing Times?

As everyone is now safely back at their desks after the annual pilgrimage to Docklands for this year’s WTM, what are the hot topics visitors will now be discussing with their colleagues?

Well for those who are involved in the travel industry and based in the UK, perhaps one will be top of many people’s agenda - tax!

November saw a further increase in the loathed APD (Airline Passenger Duty) - a tax on aviation passengers which is designed to generate millions of pounds for the Treasury and now adds anything up to £170 onto the cost of an individual ticket.

Then there is the increase in VAT which comes into effect on 1 January. That means in just two years VAT has risen from 15 to 20 per cent. So not only will that make holidays more expensive, consumers will have to dig deeper into their pockets for just about everything meaning they will have less money in their pockets for life’s luxuries.

That means even the ‘Staycation’ is likely to feel the pinch. Not only will your week’s stay at your favourite holiday park probably cost you more, the cost of fuel for your car to get there will have risen too. Some tour operators might try to absorb the increase thereby putting further pressure on their bottom line - how sustainable will this be for the long term?

Hardly surprising then in a survey carried out for The World Travel Market, 41 per cent of senior executives in the travel industry saw increasing taxation as one of the biggest issues facing the industry.

The Caribbean Tourism Organisation reported that visitors from the UK have fallen by as much as 25 per cent following the 2009 increase in APD.  CTO chief executive Hugh Riley was quoted as saying: “I am not suggesting that we can pinpoint APD as the only reason for the decrease, there is also the economy and other factors to take into consideration, however I am telling you the majority of Caribbean Countries have seen larger decreases from the UK than anywhere else.”

More anecdotal evidence comes with recent figures from the US Department of Commerce which showed in the first eight months of this year, the UK was one of only three countries to register a decline in visitors, compared with double digit increases from the likes of Japan, France and Italy.

According to the survey the increases in APD, combined with the impact of the global down turn mean the travel and tourism industries believe it will struggle to return to pre-down turn levels until at least 2016. Cheery stuff indeed.

On a more light hearted note APD has two unlikely people apparently singing from the same hymn sheet - Michael O’Leary and Willie Walsh!