Fearful that it will further reduce already-declining tourist arrivals, a coalition of airlines and tourism development groups are calling for the postponement of the April 1 implementation of the new $100 environmental impact fee (EIF).
Tourism is the largest revenue contributor to Palau's economy. Photo by Ongerung Kambes Kesolei
The EIF is an integral part of President Tommy Remengesau Jr. famed policy, the Palau National Marine Sanctuary. A portion of the EIF is supposed to go to revenues lost as a result of the country’s planned closure of a big part of its water to commercial fishing.
In 2016, there were 138,408 total arrivals compared to 161,931 in 2015,.
The International Airline Transport Association (IATA), the Japanese community in Palau, the Belau Tourism Association (BTA) and United Airlines (UAL) are among the organizations urging Congress and President Remengesau to reconsider the decision to implement the fee.
In a letter to Acting Director of the Bureau of Customs and Border Protection John Tarkong, the IATA, which represents both Japan Airlines and UAL, said that the EIF poses a number of issues, including that it “contradicts with accepted international principles” on taxation, since the fee has no demonstrated link to air transport and is not allocated to a specific purpose. Instead the EIF will raise general government revenues.
It also noted that the EIF will increase international airfares and decrease travel to Palau.
“We respectfully request that the government of Palau actively reconsiders its decision to impose the EIF on international passengers,” Ian Lorigan, IATA South West Pacific Area Manager stated in the letter, adding that the fee should be collected in an efficient and orderly manner that will give passengers sufficient advance notice of any fees.
Barbara Hepburn Rahr, UAL’s International Regulatory Asia/Pacific Senior Manager, called for a repeal in separate letter, stating that the EIF will harm Palau’s economy.
“We assert that Palau’s economy is better served by reducing barriers to trade and commerce rather than making travel more costly and burdensome,” the letter stated.
Other groups are concerned about the economic impact of the fee. Fearful that the EIF will further reduce a tourism market already in a downturn, the Japanese Community in Palau recommended postponing the EIF until the market stabilizes and Palau is able to attract more tourists. Arrivals from Japan, the largest market for Palau tourism until late 2014, when it fell to second place, have dwindled as travellers have encountered the closure of Jellyfish Lake, a severe drought and conservation measures that restricted the availability of water, and an influx in tourists from Mainland Chin.
BTA also echoed these concerns, saying that implementing the fee will negatively harm tourism and the Palau economy, and requested that Congress and the President clarify inconsistencies in the law.
“Specifically, we are asking that you consider delaying the implementation of the EIF until October 2017. This will give us time to connect with members of the Olbiil Era Kelulau (OEK) and revisit the law,” BTA’s letter stated.