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Foreign flags give cruise lines loopholes
BY TIMOTHY O'HARA
keysnews.com
Carnival Corp.
is the state's 10th largest publicly traded company, with 4,220 South
Florida employees comprising a $136 million payroll. The company engaged
in $4.3 billion in sales and posted profits of nearly $1 billion.
Its
competitor, Royal Caribbean Cruises Ltd., is also one of the larger
public companies in the state, with a South Florida staff of 2,200
workers. The company had $3.4 billion in sales.
Both companies
and their fleet of dozens of passenger liners are based in Miami. Each
brings hundreds of thousands of passengers to various Florida ports,
including Key West, each year.
However,
neither paid a penny in state corporate income tax. Cruise workers are
also not protected by U.S. labor laws, and companies do not have to pay
minimum wage and in many cases don't, critics say.
Despite both
companies having large corporate headquarters in Miami, neither company
is incorporated in the United States. Carnival is incorporated in Panama
and Royal Caribbean is incorporated in Liberia, according to company
representatives.
In fact, in
June Carnival shareholders, voted down a proposal to incorporate in the
states, citing that it would dip into profits, published reports show.
This strategy
of registering in foreign countries saves the companies millions in
federal and state taxes. A loophole exempts international transportation
companies from paying U.S. income taxes. Congress passed the law decades
ago so corporations would not be taxed in different countries. Florida
follows the federal tax code and the state never closed the loophole.
Cruise ship
companies may not pay corporate tax, but they do pay millions each year
in dockage fees and other charges imposed by local municipalities,
Carnival spokeswoman Jennifer de la Cruz said. Carnival and Royal
Caribbean employees thousands of South Florida workers, who pay income
tax. The employees contribute thousands of dollars to local economies,
de la Cruz said.
"It's not as
simple as just looking at corporate sales tax," de la Cruz said.
Labor policies
The loophole
allows the industry to exploit its labor and jeopardize passenger safety
by bypassing federal laws, says Ross Klein, author of "Cruise Ship
Blues," who has conducted several studies on the cruise industry.
In Panama and
Liberia, there are no minimum wage and labor laws. There is no limit to
the amount of hours employees can work nor any agency that regulates
working conditions, like the U.S. Occupational Safety and Health
Administration.
"You have
people who work in the engine room who rarely see the light of day,"
Klein said. "They work seven days a week, 12 hours a day."
In 1995, Klein
interviewed a waiter aboard a cruise liner who said he made $50 a month
salary and was charged $7 a week for breakage of glasses and dishes,
whether items were broken or not. In 1998, cruise line workers testified
before Congress and gave similar accounts, Klein said.
Liability
issues are also effected by the companies being incorporated in foreign
countries.
In the absence
of national legislation, claims related to accidents, injuries and
deaths on cruise ships are governed by maritime law. Maritime law is the
result of treaties between various countries and is often governed by
the court system in the country where the ship is flagged. Cruise lines
also are not responsible for the actions of concessionaires, including,
in some cases, the practice or malpractice of the physicians on board.
But the tide
could be turning.
U.S District
Courts are starting to look at civil cases dealing with malpractice and
personal injury generated from cruise ships, Alaska-based maritime
attorney Joe Geldhof said. Judges are telling the cruise industry that
their ships are picking up passengers at U.S. ports and are traveling in
state and federal waters, so they will be held to U.S. law.
No oversight
There have
been many unsuccessful attempts by Congress to have cruise lines comply
with U.S. labor and tax laws, but in each the efforts failed. During a
hearing in front of a House committee, the president of the
International Council of Cruise Lines threatened to relocate ships to
foreign ports.
While state
and federal government agencies can do nothing to regulate them
financially and have done little to regulate the industry
environmentally, residents in Alaska are trying to put an end to the
free ride, they say.
Three
environmental protection groups are sponsoring a November 2006 ballot
initiative that would impose a $50 per passenger fee on cruise ships
pulling into Alaskan ports, and require cruise lines to pay state
corporate income tax and turn over a percentage of gambling profits. The
ballot measure would also require that cruise ships obtain wastewater
discharge permits.
"They are
making profits like crazy and all we are asking them to do is make the
waters cleaner," Blue Water Network clean vessels coordinator Teri Shore
said.
tohara@keysnews.com
If you
go:
What: Last
Stand annual meeting
Featured
speaker Ross Klein
When: 6 p.m.,
Tuesday
Where: NOAA
Nancy Foster Environmental Center, Truman Waterfront.
Speaker info:
Klein is author of "Cruise Ship Blues," and has spent more than 300 days
cruising. |
