By James Stanislaus
The Airport Development Tax (ADT) was first introduced on May 1st 2011 by the United Workers Party (UWP) government, led by Prime Minister Stephenson King, as a means to fund the development and improvement of the country’s airports.
However, in November of that same year, the UWP lost the general elections, and the new SLP administration, led by Dr. Kenny D. Anthony, scrapped the ADT, citing that it was not fair or ethical to impose a tax on passengers when the project had not commenced.
The importance of having a modern airport in a tourism destination like St. Lucia cannot be overstated. It is a critical component of a successful tourism plant. A modern airport is the lifeblood of a tourism-based economy, pumping vital revenue into the local economy and creating jobs for thousands of people.
The ADT was reintroduced in 2016 by the UWP government, led by Prime Minister Allen Chastanet, as part of a broader plan to redevelop the Hewanorra International Airport. The Hewanorra Airport Redevelopment Project was a critical infrastructure project aimed at upgrading the airport to international standards, and the ADT was seen as a necessary means to fund the project. The project was estimated to cost approximately US$175 million.
The funding mechanism implemented by the Allen Chastanet administration to pay for the loan was a prudent and equitable approach. By leveraging the Airport Development Tax (ADT) as a user-fee, the cost of the loan was effectively shifted to those who directly benefited from the airport’s facilities, rather than placing an undue burden on local taxpayers. This clever strategy ensured that the loan repayment was largely shouldered by tourists, who comprise the majority of airport users, thereby minimizing the financial impact on the local community. This approach not only makes good fiscal sense but also demonstrates a forward-thinking approach to infrastructure financing.
The financing for the project was secured through a combination of loans from the Exim Bank of the Republic of China (Taiwan) and a syndicate of local and regional banks. The government took a loan of US$100 million from the Exim Bank. The remaining funding was provided by the following banks: Bank of Saint Lucia Limited (EC$58,900,000), 1st National Bank Limited (EC$54,500,000), Grenada Co-operative Bank Limited (EC$40,100,000), Antigua Commercial Bank Limited (EC$24,500,000), and the Eastern Caribbean Amalgamated Bank (EC$24,500,000).
However, upon assuming office in 2021, the SLP government, led by Prime Minister Philip Pierre, stopped the Hewanorra Airport Redevelopment Project, citing concerns about the cost and feasibility of the project. However, the government’s decision to stop the airport redevelopment project while continuing to collect the ADT is a blatant example of fiscal hypocrisy. Furthermore, the SLP government’s decision to collect the Airport Development Tax (ADT) despite the project’s stall exposes the hypocrisy of their previous complaints in 2012, when they stopped the collection of the ADT, protesting that it was unethical to collect the tax without corresponding rehabilitation work at the airport.
The government’s actions strongly suggest a lack of transparency and accountability, as it is not providing any clear explanation for how the ADT revenue is being used. This lack of transparency raises serious questions about the government’s fiscal management and its commitment to using public funds for the intended purposes. By continuing to collect the ADT without a clear plan for its use, the government is essentially treating the tax as a slush fund, available for discretionary spending on pet projects or initiatives that may not align with the original purpose of the tax.
As the general election approaches, it is concerning that this discretionary spending could be used to fund populist projects or handouts that are designed to curry favor with voters, rather than serving the broader public interest. This would be a blatant abuse of the tax system, using public funds to essentially buy votes and maintain power; in the words of the Prime Minister, “protect the victory.” The lack of accountability and transparency in the government’s use of ADT revenue is a recipe for corruption and abuse of power.
A closer look at the stalled airport project reveals that the government’s priorities seem misaligned. The project, intended to modernize and expand the airport, has been stalled for almost four years, despite the fact that neighbouring islands like Dominica and St. Vincent are actively constructing or have constructed new airports. This inaction is perplexing, especially considering the importance of the tourism sector to the economy. It raises questions about the government’s motivations and whether they are more interested in collecting airport development taxes than in completing the project. The lack of progress on this critical issue is not only disappointing but also alarming, as it may have far-reaching consequences for the economy and the livelihoods of those who depend on the tourism industry. The government’s inability to deliver on this project, combined with the potential for abuse of the tax system, demands greater accountability and transparency in their actions.
The premature termination of the project also exposes the government to substantial costs, including significant payments to the contractor, Overseas Engineering and Construction Company (OECC), and repayment of disbursements made by the banks. This additional financial burden instigated by the government is particularly irresponsible, egregious and callous given St. Lucia’s limited resources and the current economic climate of skyrocketing cost of living and widespread financial hardship.
The estimated ADT revenue collected by the government from 2022 to 2024 is an astounding one hundred and fourteen million dollars. What is the justification for collecting this revenue when the project of which it was intended has been stopped? How can the government reconcile the continued collection of the ADT with the abandonment of the airport redevelopment project? What guarantees can the government provide that the ADT revenue will be used for its intended purpose, rather than being diverted to other uses? How will the government ensure transparency and accountability in the use of the ADT revenue, and what mechanisms will be put in place to prevent the misuse of these funds?
The government’s actions have raised questions about its commitment to responsible management of public funds and its ability to make informed decisions about critical infrastructure projects. The fact that the government continues to collect the ADT despite stopping the project has further eroded trust in the government’s ability to manage the tax revenue effectively.
The ADT has the potential to be a valuable tool for funding airport development and improvement in St. Lucia. However, the government’s shambolic management of the Hewanorra Airport Redevelopment Project and the ADT will cost the taxpayers of this country immensely. These substantial and avoidable cost will ultimately be borne by the taxpayers of St. Lucia.
Therefore, I urge the government to reconsider its decision to stop the Hewanorra International Airport Redevelopment Project and to provide a clear plan for the future of the airport. I also urge the government to use the ADT revenue for its intended purpose and to provide transparency and accountability in the use of the tax revenue. The future of our tourism industry and the livelihoods of thousands of St. Lucians depend on it.
