Commentary: Cruise ships avoid paying fair share in taxes
In the eight years I’ve been writing this “Talking Transportation” column I’ve never found a reason to write about cruise ships, one of my favorite ways to travel.
Since my dad took me as a passenger on freighters through the Caribbean when I was a kid, right up to our now-annual cruises to the same area, I’ve always loved the high seas. There’s nothing easier than driving to the pier in New York City, hopping on board, and kicking back for a week.
‘Devils on the Deep Blue Sea’
A few years ago, my fascination with cruising brought me to a great book, “Devils on the Deep Blue Sea,” by Kristoffer Garin, which detailed the formative years of the cruise industry, especially the start-up of Carnival Cruise Lines in 1972.
It was a rough start, but today Carnival owns 10 cruise lines (almost half the cruise ships in the world), including Cunard, Holland America, Costa, P&O, Princess, and Seabourn. At one point they even had their own airline ferrying passengers to Miami and San Juan, their biggest embarkation ports.
By segmenting the cruise market, just as hotels do, they offer everything from singles-filled party cruises to upscale trans-Atlantic “crossings” on the Queen Mary 2 (which is where I was while reading Garin’s book in 2006).
Bad P.R. leads to bargain prices
But more recently, Carnival’s had some very bad P.R. Last year it was the crash of the Costa Concordia in Italy (whose captain abandoned ship). Then, the February stranding of the 4,000-person Triumph for days in the Gulf of Mexico (without power, food or sanitation) was just the latest in a series of engineering problems.
Another ship, Fascination, recently failed a CDC health inspection, the fourth of their ships to do so this year alone.
Last week, demand for cabins was so low that Carnival was offering cruises for $38 a night per person — less than the cost at Motel 6. And that price includes all meals (assuming those CDC inspections don’t hurt your appetite).
Admittedly, this is a weak time of year for cruising, but Carnival knows it’s always best to sail with a full ship and make money on the booze and ship excursions.
Coast Guard services but no bill
In my view, the real problem isn’t Carnival or its ships’ safety but the fact that they pay no taxes — and yet depend on the U.S. Coast Guard for their numerous rescues.
Micky Arison, son of the founder of Carnival (and owner of the Miami Heat), is the richest man in Florida. Last year, Carnival brought in $15.3 billion in revenues.
But they paid just 0.6% in U.S., state, local, and international taxes last year while, in the course of the past five years, socking taxpayers for millions of dollars in U.S. Coast Guard expenses for 90 different rescue missions.
U.S. Sen. Jay Rockefeller, a West Virginia Democrat, says Arison is a “cheater … treacherous and wrong,” and wrote asking him to do the right thing and pay up.
Carnival declined the invitation, prompting Rockefeller (the chairman of the Senate Transportation Committee) to call their response “shameful.”
Shameful, perhaps. But perfectly legal and the result, even Rockefeller admits, of sloppiness by Congress.
So expect some grandstanding, a few hearings and maybe some face-saving philanthropy by Arison. But don’t expect many changes in the cruise industry, especially in higher fares that reflect the true cost of being a “devil on the deep blue seas.”
Update from Jim Cameron: After this column was written, Carnival announced that it will reimburse the Coast Guard for the costs incurred in rescuing its ships.
Jim Cameron has been a commuter out of Darien for 22 years. He is chairman of the Connecticut Metro-North/Shore Line East Rail Commuter Council, and a member of the Coastal Corridor Transportation Investment Area and the Darien RTM. You can reach him at CTRailCommuterCouncil@gmail.com or trainweb.org/ct. For a full collection of “Talking Transportation” columns, see talkingtransportation.blogspot.com.