Daily Archives: December 24, 2012

Government tax policies killing the island tourism goose, subsidizing Carnival Cruise operations


What if every Caribbean Nation said ‘No’ to cruise ships?

by Adrian Loveridge, small hotel owner

by Adrian Loveridge, small hotel owner

Taxation, not surprisingly is a very controversial subject and while most people accept and understand the need for Government(s) to raise taxes, they also reasonably expect that collection and subsequent spending of them is equitable.

The revelation that American based Starbucks Coffee retailer, globally the second largest restaurant or cafe chain (after McDonald’s)  had paid less than 1 per cent in corporation tax, despite generating US$4.5 billion of revenue from over 700 United Kingdom branches during a 14 year period, shocked many. Over the last three years, Starbucks has reported no profit, and paid no income tax, on sales of US$1.8 billion in the United Kingdom. Apparently, the company has broken no laws, only making every possible use of existing tax legislation.

But you don’t have to travel 4,000 miles across the ‘pond’ to find similar examples, they exist right on our doorstep. Carnival Corporation, the world’s largest cruise operator with its 12 dominating brands, is a classic case in point.

“Despite declaring a profit of US$11.3 billion during the last five years, Carnival paid no US Federal taxes at all last year, even though, in essence it is headquartered in the United States.”

In fact over that same five year period, while using the services of twenty Federal agencies such as the Coast Guard and Customs, it paid an average of 1.1 per cent in federal, state, local and foreign taxes.  For a hotelier or other land based tourism business, that must seem like an unattainable dream become true. Even if you chose to ignore all the one-sided advantages the cruise ship companies have, then you cannot escape the ultimate commercial option.

If the going gets tough, they just move the ships to where they can extract higher revenues and profits.

The shipping companies will argue they pay lots of other taxes, but do they in reality?

While in many cases port fees are now included in the purchase price, but the operator merely acts an intermediary collecting them from the customer. Certainly with any Carnival group product it clearly states, but not government taxes which are an added extra, payable again by the cruiser.

You also have to ask the question, what taxes are paid on the items consumed by the passengers, like food and beverages. Absolutely none, I suspect. Do they pay the majority of their staff National Insurance contributions or any portion of any applicable personal income tax? I am also pretty certain any form of land tax doesn’t enter into the equation.

Then look at pay and working conditions. I cannot imagine any reputable trade union, either in the USA or Caribbean allowing the commonplace practices that crew onboard have to endure on many of the ships, to be tolerated here on land. Of course, they largely depend on nationals from poor and developing countries, like the Philippines, where an agricultural worker may earn as little as US$4 a day. The very low wages paid are the norm, hugely enhanced by gratuities, again, in the overwhelming number of cases, by the passenger.

This week is one of the busiest of the year for Bridgetown Port, with their website indicating some 22 ships arriving and departing.  Boxing Day alone could welcome up to 9,000 passengers based on the individual ships capacity.

Hopefully, some taxes will be left here on Barbados while visiting our attractions, activities restaurants and shopping. This may in some way, help sustain our disadvantaged land-based tourism players who unlike Carnival Corporation, already pay lots of taxes.

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