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CTO DIVIDED OVER $20 REGIONAL PORT HEAD TAX

Oct. 15, 2003 – There was no official word on Wednesday regarding the Caribbean Tourism Organization's vote on whether to impose a $20 passenger head tax on cruise ships making calls at the ports of member states and territories. The one-time fee would cover all ports on a cruise itinerary and would reportedly go into a development fund.
The CTO represents 32 countries and territories, and many are at odds over the issue. According to a BBC news report on WVWI Radio on Tuesday, St. Martin has refused to attend the conference in objection to the head tax. St. Martin, the report said, has its own $5 head tax with which it is satisfied.
A recent story online at Tax-News.com quotes Michele Paige, president of the Florida-Caribbean Cruise Association, as saying: "Taxation is a disincentive to travel. Taxation is never the way to go, especially in this economic climate." The story says Paige was speaking to the Caribbean Media Corporation in an interview on Sept. 16. She added that the new fee would compare very unfavorably to Mexico's $3 head tax."
The Tax-News.com article cited the Antigua Sun as saying that the head tax is part of a proposal put forward by CARICOM ministers to finance a development fund, although apparently without the backing of some governments. (CARICOM is the 14-member Caribbean Community, which encompasses the Caribbean Common Market of 13 members.)
The article quoted Paige as telling the CMC: "Prime Minister Douglas of St. Kitts has indicated that he is not in favor of the proposed tax; Minister Bush from the Cayman Islands, Commissioner Highlander of St. Maarten, and other numerous destinations have indicated that they are not in favor of the tax."
Officials of the CTO, which is holding its annual Caribbean Tourism Conference on St. Thomas this week, have made no announcement on the matter. The F-CCA held its annual meeting last week in St. Martin.
Tourism Commissioner Pamela Richards, who is first vice chair of the CTO board, said on Wednesday at a media luncheon sponsored by the department at Government House that she had just left a meeting where the issue was being debated. "It was just getting hot when I had to leave to come here," she said. The CTO was at that time getting an opinion from its legal counsel, she said.
Richards said the territory would participate in the head tax as a member of the CTO. She said it is a one-time tax which would be collected by the cruise lines and handled by an independent agency and paid into a "human resources fund." Each passenger's $20 would apply to any islands they would visit.
Richards said she is not sure this "is the way we should proceed." She suggested that a better approach might be "to go to the cruise lines and say we want our products on your ships." The cruise ships compete with port destinations for passengers' shopping funds, selling a vast variety of merchandise in their onboard boutiques and malls.
Richards said the CTO head tax issue should not be confused with a proposal by the Senate minority bloc to increase the territory's current $7.50 passenger tax by $5, to $12.50. "That is completely different," she said.
Sens. Carlton Dowe and Usie Richards, both minority members, have said the increased V.I. tax could generate $9.5 million a year from a revenue source other than V.I. residents. Both senators have challenged a long-term agreement between the Virgin Islands and the F-CCA signed in 2001. (See "More ship calls in lieu of head tax increase".)
The senators say the F-CCA hasn't held up its end of several parts of the agreement, most particularly a stipulation of more cruise ship calls to St. Croix. In fact, the cruise lines that were calling at the island at that time have since taken it off their itineraries. The island currently has no cruise ship schedule, and has had virtually none for the last year. The agreement also defines a $100,000 scholarship program to be funded over a four-year period, which has never been implemented, the senators say.
On the other hand, the agreement also provides for the Virgin Islands to develop in cooperation with the cruise lines and then implement a destination marketing plan for St. Croix as a condition of the companies increasing their visits. That has not been done, either. Richards and a citizens' group on St. Croix submitted separate proposals to the cruise lines more than a year ago, but there has been no public announcement of any follow-up
The senators proposed the local head tax increase as one of a number of suggested ways to increase revenues in order to reduce the territory's budget deficit.
Pamela Richards said on Wednesday that the absence of ships calling at St. Croix is "a numbers issue." "It is the aggregate of passengers," she said.
As for the scholarship commitment, she said the cruise lines give generously to local organizations, such as the Women's Coalition of St. Croix, each year, if not to a specific scholarship program. One company made a major contribution to the construction of a public aquatic center on St. Thomas that has been in the planning and construction stages for years.

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