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Cruise industry hits back over Bahamas 'free ride' claim
Published on March 20, 2014 Email To Friend    Print Version

Cruise ships in Nassau Harbour

By Alison Lowe
Nassau Guardian Business Editor

NASSAU, Bahamas -- The head of the Florida Caribbean Cruise Association (FCCA) has hit back at a suggestion by Bahamas tourism stakeholders that the cruise industry is not paying its fair share of taxes, pointing to what she said are fees that are already the “highest in the region” and concerns over crime, VAT, and other issues for cruise ships coming into Nassau.

Meanwhile, Michele Paige, president of the FCCA, also revealed that the industry has been “begging for improvements” in the Bahamian tourism product in light of the fact that many passengers do not depart the cruise ships when they come into the Port of Nassau.

In light of this, Paige told Guardian Business that she was “pretty concerned” when she read comments in Guardian Business on Tuesday from senior vice president of administration and external affairs at Baha Mar, Robert Sands, and president of the Bahamas Hotel Employers Association, Stuart Bowe, calling for the government to stop letting cruise lines get what he called a “free ride” when it comes to taxes paid.

In an interview with Darold Miller on Guardian Talk Radio on Monday, Sands said that increasing the taxes paid by the cruise sector is part of the tourism industry’s proposal to government in response to its plans to implement value-added tax (VAT) on July 1.

Calling the cruise sector, which has come to dominate Bahamian tourism in terms of its contribution to visitor arrival numbers, the “least taxed sector”, Sands said that the Bahamas Hotel and Tourism Association (BHTA) would like to see the government increase the departure taxes paid by cruise lines per passenger. This is just one component of the tourism sector’s “smart tax” plan which it says could be implemented in place of a VAT at 15 percent or thereabouts on July 1, 2014.

Sands is not alone in his suggestion that the cruise industry’s contribution to the local economy may not be as great as it could be. Bowe recently commented on the lower spend per passenger of cruise visitors, suggesting that the country must do more to build its stop-over arrivals, while Dr Andrew Spencer, head of the Centre for Tourism Management at the University of West Indies, told the Bahamas Business Outlook in January that The Bahamas should “band together” with the region in talks with the cruise lines to get a better deal in negotiations on their economic contribution.

Paige said: “I read [the article in Guardian Business] and I was pretty concerned. On top of everything else we are now being told we don’t pay The Bahamas enough taxes? Nassau has the highest fees of any place we go. The highest fees by two-fold. And then we have the issue of crime, and of VAT, and the other issue hanging over our head is that we’ve been begging for the product to be improved because a significant amount of passengers don’t get off the ship.”

At present, cruise lines are subject to a $20 per head departure tax, but the effective rate of departure tax paid is often closer to $7 or $8, according to Sands, in light of passenger volume-based tax breaks granted to the cruise companies. Sands suggested that the rest of the tourism sector has become “heavily” taxed in recent years, while cruise lines have “benefitted tremendously” from coming to The Bahamas while paying relatively little.

Asked if her reference to The Bahamas having “the highest fees” in the region are a reference to the actual or effective departure tax applied, Paige said she “did not know” exactly what the various companies are paying per passenger, and made reference to the “significant amount of passengers” they bring to The Bahamas.

She urged Bahamian tourism stakeholders to redirect their energies to issues other than taxation if they wish to see a greater benefit to The Bahamas from cruise tourism.

“What I would be looking at as a hotelier is how do we get passengers on cruises to spend more money and stay in hotels? You have a significant amount of tourists coming on what is essentially a familiarization trip... It’s a no-brainer it should be looked at positively not negatively,” said Paige.

The cruise industry advocate pointed to a period in the 1990s when she claimed that “sixty percent” of cruise lines pulled out of this country due to concerns over the cost of calling in Nassau.

“This isn’t me, this is what history says,” she added.

Republished with permission of the Nassau Guardian
Reads: 2808

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Robert MacLellan:

Finally, the hotel industry itself, not the CHTA, is raising this vital issue. More of the burden of tax should be shifted over to the cruise line industry from hotels and air fares in the region. Stay-over visitors are the tourists who spend money in businesses where companies have made long term investment in the islands. Today 82% of a cruise passenger's DISCRETIONARY spend is on board these huge floating resorts. These huge ships tie up at big new cruise docks which are paid for by local tax payers. They compete with local hotels during the high season then sail off to another high season elsewhere in the world. Governments need to level the competitive playing field in favour of local hotels - most of which are still struggling from the 2008 financial meltdown.


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