It's Always Bigger in Texas: Cruise Passengers Taxed on Cruise Booze

KHOU 11 reports that alcohol and cigarettes purchased by cruise passengers, represented by cruise lines as "duty-free products," are being taxed by the Texas Alcoholic Beverage Commission (TABC) once the ships return to Galveston.

The state of Texas will start collecting similar taxes from cruise passengers at the Port of Houston by in October.

The television station says that the state of Texas has collected over $280,000 from cruise passengers since January. 

The cruise lines misrepresent that the liquor and cigarettes are tax free, and then the TABC officials confront the returning cruise passengers as they come through customs.

The station quotes a passenger saying "They advertise it as duty free on the ship and when we get off the ship, to our surprise, it's not duty free. I think it's wrong." 

Have a thought?  Please leave a comment below or join the discussion on our Facebook page.

 

Celebrity Says Goodbye to Century Cruise Ship

Multiple sources are reporting that Royal Caribbean entered into an agreement to sell the Celebrity Century cruise ship to a Chinese cruise company. 

The company buying the Century is identified as Exquisite Marine Ltd., a holding company controlled by Ctrip International Ltd.

Royal Caribbean says that the Century will "complete its scheduled sailings through the March 22, 2015, itinerary. The 15-night, Dubai to Rome sailing on April 5, 2015 is being redeployed to a 14-night sailing from Dubai to Singapore. Guests with affected individual bookings and named group bookings Celebrity Centuryon Celebrity Century's April 5, 2015 sailing from Dubai to Rome have the option to either cancel their booking and receive a full refund or move to an alternative sailing and receive a re-accommodation onboard credit as well as compensation to cover air change fees. Guests with reservations affected by the transition will be proactively contacted by Celebrity Cruises. Guests and Travel Agents with specific questions are welcome to call 1-888-283-7275."

The Century joined the Celebrity fleet in December 1995. 

On of my first cases against a cruise line involved the Century. An elderly woman fell on a worn-out, slippery deck, breaking her hip.    

It was a different era back then. The Century was a 70,00-ton ship carrying only 1,800 guests with 860 crew. We will see more and more cruise ships of this vintage appear in the Chinese and European markets as Royal Caribbean brings its monster ships on line.  

 

Photo Credit: Wikipedia / Riley Huntley (Huntley Photography)

The Rich Get Richer: Royal Caribbean's Fain Cashes In

Richard Fain Adam GoldsteonReuters reports that Royal Caribbean's CEO Richard Fain recently sold 94,850 shares at average price of $62.38 for a total value of $5,916,743.00; and exercised options for 51,143 shares at $7.27 per share for a total value of $3,190,300.00.

CEO Fain holds over a million shares of his cruise line's stock.  Reuters says he holds 1,380,000 (million) shares for a value of over $86,000,000. Tech Insider says that owns 1,153,689 company shares for a total value of around $72,000,000. This excludes the shares owned by various trusts for the benefit of of the Fain family. 

Earlier this week, we reported that Royal Caribbean Chief Operating Officer (COO) Adam Goldstein unloaded sold 42,152 shares of RCL stock at an average price of $61.68 for $2,599,935.36. COO Goldstein still owns 370,724 shares valued at $22,866,256.

Notwithstanding the vast wealth of these cruise CEO's, Royal Caribbean has made substantial cut-backs in the salaries of its staff and crew members, increased work, and reduced benefits. 

 

Photo Credits: Royal Caribbean Press Center

The Rich Get Richer: Cruise Executive Goldstein Unloads $2,599,935.36 of Royal Caribbean Stock

Media reports say that Royal Caribbean Cruises Chief Operating Officer (COO) Adam Goldstein sold 42,152 shares of his cruise company’s stock yesterday.

The shares were sold at an average price of $61.68 for $2,599,935.36.

COO Goldstein still owns 370,724 shares of Royal Caribbean stock, valued at $22,866,256.

Royal Caribbean announced its earnings results on Thursday. The cruise line reported revenue of $1.98 billion for the quarter. The company’s quarterly revenue was up 5.2%.  

Royal Caribbean We last reported on Mr. Goldstein in February when he sold 44,256 shares of Royal Caribbean stock at an average price of $52.96, for a total transaction of $2,343,797.76.  

What do the hard working crew members and the loyal shore-side cruise employees think of all of the money Mr. Goldstein is raking in? 

The cruise line pays a minimal salary to Royal Caribbean waiters and cabin attendants of only $50 a month; the cruise passengers pay tips to the waiters and stewards but the cruise line is scooping up much of the tips to pay other crew member's salaries. Employees like utility cleaners earn a pittance of around $550 a month (with no tips) working around 11-12 hours a day, every day of the month during contracts that are 6-8 months long.

In September of last year, Royal Caribbean fired over one-hundred employees in its corporate offices in order to increase profits. You can read about that here: Loyal to Royal? Royal Caribbean Axes 100 Jobs in Corporate Headquarters.

What's the saying? The rich get richer, the poor get poorer.

Shocking News: Carnival Incorporates in the U.S. & Subjects Itself to U.S. Tax, Labor, Wage, Safety & Environmental Regulations

In an exclusive story, Cruise Line News has learned that cruise industry giant Carnival Corporation recently incorporated its business in the United States (in the state of Delaware). Carnival intends to announce this historic development tomorrow, April 2nd, at Carnival's headquarters in Miami.

Since 1972, Carnival has incorporated its business and registered its cruise ships in the country of Panama. For over 40 years, Carnival cruise ships have flown the flag of Panama in order to avoid the onerous safety regulations, excessive labor laws, unreasonable environmental laws, and high taxes of the United States of America.

Cruise Law News' discovery of this historic event came about when prominent maritime lawyer Jim Walker bumped into Carnival's Chairman Micky Arison at court side when Arison's championship basketball team, the Miami Heat, won another game. Maritime ace lawyer Walker asked Arison: "Micky, if Dwayne Wade and LeBron James earn several hundred million dollars from Carnival and pay tens of Mickey Arison Miami Heat Carnival Cruisemillions of dollars in U.S. taxes, don't you think it is fair that Carnival - which earns over 15 billion dollars a year in cruise ticket sales - pays its fair share of U.S. taxes?"

Perhaps it was the euphoria of the Heat beating the Portland Trailblazers by two points in a close victory, but Micky was ecstatic. "Yes, let's do it!" he said handing maritime lawyer Walker a half-eaten hot dog and three-quarters of a warm Bud Light which a Miami cheerleader handed Micky in the first quarter of the previous game a few days earlier.

While quickly consuming the beer and hot dog in the excitement of the moment, expert cruise lawyer Walker happened to have U.S. articles of incorporation which he handed to Micky to sign as well as U.S. flags to fly on the Carnival fleet of cruise ships.

Arison has been under intense pressure lately following fires, collisions, sinkings, poop-cruises, pirate-attacks, flounderings, Concordia-disasters, norovirus outbreaks and a Jon Secada concert which have ruined the last 37 Carnival cruises.  Senator Jay Rockefeller recently called Arison a "scallywag" on national TV. Rockefeller challenged Arison to pay his fair share of U.S. taxes on the billion-dollar bounty his foreign-flagged cruise ships collect from the U.S. taxpaying citizens on the high seas.

Micky commented that he was embarrassed that his father Ted, the founder of Carnival Cruise Lines 40 years ago, denounced his U.S. citizenship in order to avoid paying some 10 billion dollars in U.S. taxes.

Arison admitted that he felt guilty selling 1% of his Carnival stock for a $395,000,000 profit while suspending the crew member's retirement benefits.

"I want to make certain that Carnival pays one hundred % of our U.S. tax obligations (estimated to be over $5,000,000,000 a year) plus be subjected to the most rigorous U.S. safety, wage,and labor laws and the most stringent U.S. environmental regulations, Micky announced over the arena's PA system! "I want Carnival Cruise Line to be synonymous with Old Betsy - the U.S. Stars and Stripes - what the U.S. stands for! Its time that indigent crew members from India and Nicaragua who earn $500 working 360 hours a month be entitled to the full benefit of U.S. employment laws, a 401(k) retirement fund, severance pay, and a college fund for their children!" 

While appreciative of Arison's change of heart, sources say Walker was miffed that Arison demanded that he pay $6 for the remains of the hot dog and $7.50 for the rest of the Bud Light.

Carnival Cruise Compensation: The Rich Get Richer

Travel Weekly and Skift recently reported that the new CEO of Carnival Corporation, Arnold Donald, will receive the following in compensation:

Arnold Donald - Carnival Cruise Lines Compensation$1 million base salary to start, with reviews by the board of directors to increase or decrease his salary;

A fixed bonus of $1.125 million for 2013;

A one-time award of performance-based restricted stock with a target value of $3 million, although it could be 5 times that depending on company’s performance;

An annual stock award with a fair market value of $3.5 million in long term incentives;

$350,000 to cover relocation and temporary living expenses; and

A bonus for 2014 up to $2.65 million which could go up to $5.3 million in 2015.

You can read the official SEC filing here.

Mr. Donald must be so happy that he feels like dancing. 

The only things missing are a half dozen front row seats to the Miami Heat games.

This news must feel like salt into the wounds of the long term Carnival Cruise Lines crew members who lost their retirement benefits earlier this week. 

 

Photo Image: St. Louis Post Dispatch

Royal Caribbean President Sells Stock

Adam Goldstein Royal CaribbeanNews sources report that Royal Caribbean President Adam Goldstein sold 7,855 shares of RCL stock on the open market in a transaction yesterday.

Goldstein's sold the stock at an average price of $43.22, for a total value of $339,493.10.

He reportedly now directly owns 335,654 shares of Royal Caribbean stock, valued at approximately $14,506,966.

Yesterday on our Facebook page, I suggested that at a price of $43 you should take your profit on RCL stock and run.

In July 2013, we reported that President Goldstein sold almost 19,000 shares of RCL stock worth over $700,000. This year Goldstein has sold over $1,000,000 of his company's stock. 

Two years ago, Goldstein sold over 40,000 shares between February 1 - 16, 2011 - for a total of over $1,900,000.

Royal Caribbean has not suffered the same severe problems as rival Carnival this year, but it has had its share of problems.  It suffered a major fire on the Grandeur of the Seas in May, and its subsidiary brand Pullmantur also a major fire on the Zenith cruise ship in June.

Just last month, Royal Caribbean cleaned house and terminated over 100 employees in its corporate offices in Miami as a cost saving measure. Read about that here: Loyal to Royal? Royal Caribbean Axes 100 Jobs in Corporate Headquarters.   

Senator Rockefeller to Cruise Lines: You Can't Operate for Free in the U.S.

As promised, Senator Jay Rockefeller announced that he has introduced legislation seeking to eliminate the Section 883 exemption for cruise industry income derived from cruises that embark or disembark passengers in the U.S.  Senator Rockefeller stated in a press release: 

“The cruise industry can’t operate for free here in the U.S. It costs money to send the Coast Guard to tow their drifting ships and it costs money to maintain the ports they use. Cruise lines need to start paying their fair share of taxes and stop expecting everyone else to foot the bill.”

Over the last year, Senator Rockefeller has raised concerns that the cruise industry has used the infrastructure of U.S. ports, the resources of the U.S. Navy and Coast Guard, and  more than 20 U.S. agencies, but has paid virtually no U.S. taxes. At the same time, the U.S. Coast Guard is substantially Cruise Ship Taxesunder-funded and is increasingly called upon to assist cruise lines which are experiencing fires and engine failures.

Efforts to repeal the exception have been a long time coming.  Earlier this year, as the disabled Carnival cruise ship Triumph was being towed back to the U.S. at U.S. taxpayer expense, Forbes published an article: Ship Isn't The Only Thing That Stinks At Carnival: Low Tax Rate Stirs Ire.   

The cruise industry enjoys a substantial tax advantage over shore-side hotels, restaurants and amusement parks by incorporating their businesses and registering their cruise ships in foreign countries. This permits the cruise lines to sell their cruises at artificially low prices.  Although Carnival and Royal Caribbean are based here in the U.S., they are registered in Panama and Liberia respectively to avoid U.S. taxes.  

Rockefeller's proposed legislation would eliminate the tax exemption for cruise lines and impose a 5 percent excise tax on gross income if passengers get on or off a ship in the U.S. The tax would be targeted to improve the transportation infrastructure.

Avoiding taxes is a cornerstone of the cruise industry's business model. Expect CLIA and the cruise lines to mount a heavy PR campaign to try and kill the new bill.  

Interested in this issue? Consider reading:

Over Past 5 Years, Carnival Paid Taxes of Only 0.6% on Billions & Billions

Cruise Lines Depend on U.S. Coast Guard for Safety & Security But Pay Nothing

Under Pressure, Carnival Agrees to Reimburse U.S. for Coast Guard & Navy Costs in Responding to Disabled Triumph & Splendor Cruise Ships

Your Tax Dollars At Sea - Who Pays When Things Go Wrong on Cruises?

Have a thought about this issue?  Leave a comment below or join the discussion on our Facebook page.
 

Below - watch a NBC special where Senator Rockefeller and I are interviewed about Carnival's avoidance of U.S. taxes: 

  

 

"CNN Effect" Doesn't Stop Royal Caribbean CEO From Buying Nearly $1,000,000 in RCL Cruise Stock

Yesterday, I wrote a short article about Royal Caribbean President Adam Goldstein selling 2,181 shares of RCL cruise stock earlier this week at an average price of $36.80, for a total value of $80,260.80. Cruise executives buying and selling their company's own stock is interesting to me as an indicator into their true thoughts about the direction of their business' future.

That being said, an cruise executive's sale of only $80,000 worth of stock doesn't say much. $80,000 may pay the annual wages of a dozen RCL utility cleaners but it's pocket change for a cruise line president. Goldstein still owns 335,654 shares of the company’s stock worth over $12,350,000.   

But today Forbes reports that Royal Caribbean CEO Richard Fain purchased 26,800 shares of RCL stock which, at a price of $36.82 a share, turns out to be $985,776.

As Forbes writes: "company’s own top management tend to have the best inside view into the business, so when company officers make major buys, investors are wise to take notice."

RCL’s low point in its 52 week range is $24.16 per share. Its 52 week high is $38.62. 

So CEO Fain is buying near the top of the chart. Seems risky to me.

As we mentioned this week, research firms are split on RCL's stock. One analyst gave the stock a "sell" rating, nine analysts assigned a "hold" rating and ten issued a "buy" rating. RCL currently has a consensus rating of “hold” and a consensus target price of $40.21.

Royal Caribbean Cruise Richard Fain Travel Weekly quoted Fain at the cruise line's second-quarter earning call last week. He said that despite the “unrelenting pressure of a deluge of negative publicity” on the cruise industry, things are looking up. Mr. Fain said the company is overcoming what he called the "CNN effect” of negative media scrutiny on things like highly publicized cruise ship fires that have occurred this year.

Royal Caribbean suffered a serious fire to its Grandeur of the Seas. And just last month, it's subsidiary brand Pullmantur's Zenith suffered an engine room fire which disabled the ship which needed to be pulled by tugs to back to shore.  

Royal Caribbean is also suffering from the spill-over effect from the negative publicity caused by Carnival's Costa Concordia disaster and the Triumph's infamous "poop cruise," in addition to other Carnival cruise ship mishaps.   

Does Mr. Fain know something that the analysts and the public doesn't know? Or this really a big calculated bluff to prime the pump of positive thinking?

I am not too sure that I would bank on a more positive public perception of the cruise industry developing naturally. The "CNN effect" is real.  In my opinion, the images broadcast by CNN are a lot more persuasive and powerful than the positive musings of a hopeful cruise executive.  

Plus there's a couple of things to keep in mind. There are increasing cut backs in RCL officer and staff salaries and crew pay coupled with an increase in their responsibilities which are deteriorating morale on the ships. Some of the tips which formerly went to the RCL cabin attendants and waiters are being channeled away from the crew to the company's income stream and destroying the crew's attitude in the process. And the MLC will come onto effect next month, restricting crew member working excessive hours, which may increase RCL's costs, restrict the cruise line's historical exploitation of its crew, and push its profit margins down.

Royal Caribbean Grandeur of the SeasRCL's cost cutting measures helped it to squeeze out a profit this past quarter, but it was under $25 million on gross revenues of $1.88 billion. How much more can RCL cut from the already overworked and underpaid crew?

And no cruise executive pumping up a stock price would dare mention Senator Rockefeller's announcement last week that he intends to introduce legislation to take away the loopholes in the U.S. tax code which permits the cruise lines to avoid U.S. taxes on its foreign flagged cruise ships.

Are brighter days ahead for RCL and CEO Fain's newly acquired 26,800 shares?

Maybe. Maybe not. But one thing is certain. All it will take is for one cruise ship to suffer another engine room fire for the "CNN effect" to send the RCL stock price plummeting south.

July 31 2013 Update: Watch List News reports that Royal Caribbean Cruises' President  Adam Goldstein "dumped 16,717 shares of the stock on the open market in a transaction that occurred on Tuesday, July 30th. The stock was sold at an average price of $37.20, for a total value of $621,872.40."

 

Photo Credit:

Top: Royal Caribbean Press Center

Bottom: Janeeva Russell / The Freeport Times / AP

Royal Caribbean President Sells 2,181 Shares of Cruise Stock

RCL Adam Goldstein The Daily Political reports that Royal Caribbean President Adam Goldstein (left) unloaded 2,181 shares of RCL cruise stock yesterday at an average price of $36.80, for a total value of $80,260.80.

Goldstein still owns 335,654 shares of the company’s stock worth over $12,350,000. 

A number of research firms have recently commented on RCL's stock value. One analyst gave the stock a "sell" rating, nine analysts assigned a "hold" rating and ten issued a "buy" rating to the company’s stock. RCL currently has a consensus rating of “hold” and a consensus target price of $40.21.

The stock has a 52 week low of $24.16 and a 52 week high of $38.62. 

Royal Caribbean posted its quarterly earnings last week. The company had revenue of $1.88 billion for the quarter, with a profit of under $25,000,000.  

RCL Chairman Richard Fain (below right) said that a fire on the Royal Caribbean cruise ship Grandeur of the Seas, weak pricing in the Caribbean and itinerary disruptions in Asia affected earnings in the second quarter. 

RCL Chairman Richard FainThe cruise line's business model is predicated on its avoidance of U.S. taxes and regulations, such as minimum wage, overtime, and OHSA regulations. Royal Caribbean avoids taxes and many U.S. regulations by incorporating itself in Africa and incorporating its cruise ships in places like the Bahamas and Malta.

Royal Caribbean and its subsidiaries are currently exempt from U.S. corporate tax on U.S. source income from the international operation of cruise ships pursuant to Section 883 of the Internal Revenue Code.

Senator Rockefeller stated at a Senate hearing last week that he would introduce legislation to close loopholes in the federal tax code which permits foreign incorporated companies operating foreign flagged cruise ships to avoid paying their fair share of U.S. taxes.

If such legislation was enacted into law, the RCL stock value would plummet. 

July 21 2013 Update: Watch List News reports that Royal Caribbean Cruises' President Adam Goldstein "dumped 16,717 shares of the stock on the open market in a transaction that occurred on Tuesday, July 30th. The stock was sold at an average price of $37.20, for a total value of $621,872.40."

 

Photo Credits: Top - NBC News; Bottom - Examiner.com

Senator Rockefeller Places Royal Caribbean & Norwegian Cruise Line Under the Microscope: Will Cruise CEO's Fain and Sheehan Be Honest?

Cruise lines hate U.S. governmental scrutiny of their business operations.  

The whole purpose of incorporating their businesses and flagging their cruise ships in foreign countries is to avoid U.S. taxes and the scrutiny of federal regulators. This business model permits the cruise lines to pay virtually no U.S. taxes and to avoid U.S. wage, labor and safety laws. Cruise lines often conceal shipboard crimes and the industry's abuse of crew members.

But one U.S. Senator, Jay Rockefeller of West Virginia, is taking the cruise lines' lack of transparency head on. Following Carnival's string of disabled cruise ships and nonchalant attitude towards its quests, Senator Rockefeller sent a letter to Carnival billionaire cruise CEO Micky Arison in March, inquiring into issues pertaining to the cruise line's avoidance of taxes as well as issues regarding the safety of cruise passengers. You can read the letter here

Carnival's letter back to Rockefeller dodged and weaved and argued and mostly avoided responding to Senator Rockefeller's concerns. Carnival refused to disclose, for example, the number of victims of sexual assault - a topic that the cruise lines strenuously try to avoid talking about.  We summarized Arison's defiant attitude in our article: Carnival CEO Arison's Letter to Senator Rockefeller: Screw You!

Undaunted, Senator Rockefeller has sent another letter to Arison and has also sent letters to the CEO of Royal Caribbean Cruises (Richard Fain) and Norwegian Cruise Lines (Kevin Sheehan).

NCL Cruise CEO Kevin SheehanIn his letters yesterday, the Senator is inquiring into the internal safety audits which the cruise lines and the cruise association are allegedly conducting. At the recent cruise trade show on Miami Beach, the Carnival, Royal Caribbean and NCL cruise executives talked at length about their ability to learn from their own internal investigations but never stated that they would release the reports from the investigations.

This is the usual cruise line ploy: assuring the public that they are busy at work investigating themselves after cruise ships sink or catch on fire; however, they never ever disclose the results of their alleged investigations. Carnival said that it was conducting an internal audit of its operations after the Carnival Splendor was disabled after an engine room fire in 2010.  But Carnival has never released the results of its investigation. The public remains in the dark.

Senator Rockefeller is also again demanding that the cruise lines disclose the number of crimes, particularly sexual assault, on cruise ships. The cruise industry has been notoriously dishonest in revealing accurate crimes statistics. It usually defaults to conclusory, self-serving opinions that crime is "rare" while simultaneously concealing the true crime statistics.

At a prior Congressional hearing, Royal Caribbean responded to a Congressional inquiry by stating Royal Caribbean Cruise CEO Richard Fainthat 66 women were raped during a three year period.  But in a court case we handled, the cruise line was ordered to reveal that the actual number of such crimes was much higher.

The LA Times reported on the cover-up in an article: Cruise Industry's Dark Waters.   

Royal Caribbean faced no consequence for misleading Congress back in 2006.  

The cruise lines' response to Senator Rockefeller in due on May 24th.  

Will RCCL CEO Fain and NCL CEO Sheehan be transparent? Or will they join Arison in a game of hide and seek?

Under Pressure, Carnival Agrees to Reimburse U.S. for Coast Guard & Navy Costs in Responding to Disabled Triumph & Splendor Cruise Ships

Under public criticism and pressure initiated by U.S. Senator Rockefeller, Carnival announced today that it will reimburse the federal government for costs of over $4,000,000 incurred by the U.S. Coast Guard and U.S. Navy in responding to its Triumph and Splendor cruise ships. 

Senator Rockefeller set his sights on the cruise industry at a Senate hearing last year following the deadly disaster of the Carnival-owned Costa Concordia cruise ship.  Rockefeller grilled the cruise industry's CEO and questioned why the cruise lines avoided most U.S. taxes and did not reimburse the federal government Senator Rockefeller - Micky Arisonfor the services of some 20 federal agencies.

Senator Rockefeller recently sent a letter to Carnival CEO Micky Arison, who is worth over 5.7 billions dollars, demanding an explanation why Carnival paid virtually no U.S. taxes even though the Panamanian incorporated cruise line uses the services of the U.S. Coast Guard and other U.S. agencies on a daily basis.  Carnival's response was labeled "shameful" by Rockefeller.

NBC aired a special on the story and interviewed Rockefeller (and me) during the program. NBC's Rock Center commissioned an audit of Carnival which revealed that Carnival paid 0.6% in international, federal, national, and local taxes on its many billions of dollars in income over the course of the last 5 years.    

Numerous news sources, including the Huffington Post, published articles highly critical of Carnival. Since then, Carnival has been the butt of "poop ship" jokes and ridiculed for non-payment of U.S. taxes. Carnival has been clobbered in the arena of public opinion.    

Carnival released a statement today saying: “Although no agencies have requested remuneration, the company has made the decision to voluntarily provide reimbursement to the federal government.”

Senator Rockefeller responded by saying: “I’m glad to see that Carnival owned up to the bare minimum of corporate responsibility by reimbursing federal taxpayers for these two incidents. I am still committed Micky Arison - Senator Rockefeller  to making sure the cruise industry as a whole pays its fair share in taxes, complies with strict safety standards, and holds the safety of its passengers above profits.”

The issue of Carnival's avoidance of paying taxes and for U.S. services has been brewing for years. The International Cruise Victims (ICV) organization, a non-profit organization focused on crimes and disappearances of passengers on cruise ships, has addressed the issue of cruise tax avoidance for years.  ICV CEO Ken Carver sent a Freedom of Information Act (FOIA) request for the costs associated with the U.S. Navy and U.S. Coast Guard responding to the disabled Carnival Splendor in November 2010.

Mr. Carver's investigation led to a response from the Navy which revealed that the Navy incurred $1,884,376.75 in responding to the disabled Splendor which included sending the U.S. aircraft carrier Ronald Reagan and helicopters to the fire stricken cruise ship.

Read: Your Tax Dollars At Sea - Who Pays When Things Go Wrong on Cruises?     

Congratulations to the ICV and CEO Ken Carver for raising this issue over the past years.

Cruise Lines Depend on U.S. Coast Guard for Safety & Security But Pay Nothing

Coast Guard - Cruise Line - TaxesToday I read a press release by the U.S. Coast Guard about a maritime safety exercise conducted in the waters of Freeport Grand Bahamas.

U.S. Coast Guard crew members from the Coast Guard Cutter Diamondback conducted a safety exercise with Royal Caribbean's Monarch of the Seas on April 2, 2013. The exercise was called "Black Swan" and was described as "a joint offshore emergency exercise" coordinated by the Coast Guard, the cruise line industry and the Bahamian government.

You can see from the photos, taken Chris Todd, U.S. Coast Guard Auxiliary, that multiple Coast Guard vessels were involved.

The cruise industry's trade organization, the Cruise Line International association (CLIA) touted the exercise as part of the cruise industry's commitment to safety.  CLIA CEO Chritine Duffy said the exercise:

" . . . further strengthens the cruise industry's unwavering commitment to emergency preparedness in coordination with the Coast Guard and other government authorities . . . (and) underscores the focus we maintain on our No. 1 priority: the safety and comfort of our guests.” 

What CLIA does not mention is that the cruise industry does not pay for the Coast Guard services even though the cruise lines collect over $35,000,000,000 (billion) a year but pay less than 1% a year in local, state, federal and international taxes a year. 

The Coast Guard is severely under-funded but receives absolutely no reimbursement from the cruise lines. The cruise industry then uses the exercises (paid for by U.S. taxpayers) as part of its marketing to sell cruise tickets to the tax-paying public.  

The cruise lines have rightfully been criticized for not reimbursing the Coast Guard for rescuing vessel at sea.  But there are many, many other expenses which the Coast Guard incurs which the cruise lines do not reimburse, such as daily Coast Guard escorts into and out of U.S. ports, safety exercises, and medevac airlifts of ill crew members and passengers.

At a time of financial crisis in the U.S., it is obscene that the cruise industry gets a free ride from our federal government for services like this.  A friend just emailed me about this PR exercise by the cruise lines: "what a gross waste of money by US taxpayers in support of an industry that is so arrogant and exploitative of US resources." 

Coast Guard - Cruise Ship - Payment of Expenses

Senator Rockefeller: Carnival's Response to Congressional Inquiry "Shameful"

Micky Arison - Senator Rockefeller - Cruise Ship TaxesAs I mentioned earlier, Carnival responded to Senator Rockefeller's letter inquiring into the cruise line's avoidance of U.S taxes and its refusal to reimburse federal agencies for services rendered with what I characterized the other day as a "screw you!" letter.

Today news sources are reporting that Senator Rockefeller characterized Carnival's response as "shameful."  

Carnival's letter dodged the central question of exactly what and how much the cruise line pays in taxes.

Senator Rockefeller - Micky Arison Cruise Ship Tax DisputeA recent audit of Carnival's finances on behalf of NBC News revealed that Carnival paid only 0.6% in taxes on the billions and billions of dollars collected from its passengers over the last five years. That's less than 1% in local, state, federal and international taxes. 

One thing is clear to me at this point. Senator Rockefeller is not going to drop the issue after receiving a blow-off letter like this from Carnival's CEO Arison.  

Rockefeller convened a hearing last year after the Costa Concordia disaster and grilled the cruise line's representatives at that meeting about the non-payment of taxes, non-payment for the services of the Coast Guard and other federal agencies, and pollution.

Rockefeller seems likely to schedule another one soon. 

This may be a good time to introduce legislation to create some meaningful oversight of foreign cruise lines given the public's loss of confidence in Carnival following its streak of cruise ship fires and disabled ships.   

 

Federal Budget Cuts Delay Cruise Passengers

Yesterday cruise passengers at Port Everglades waited for up to four hours in long lines to be processed by customs and border protection officials.  

Due to budget cuts caused by the federal budget sequester, there were only three U.S. Customs Border Protection Officers working.

There were also long lines of passengers waiting to board the cruise ships in port.

WSVN-7 interviewed a number of passengers from the Carnival Freedom cruise ship. 

Carnival has become under criticism of late for paying less than one percent in local. state and federal taxes on its billions and billions collected from cruise passengers over the years. Last year, Carnival collected over $15 billion dollars alone.

Most cruise passengers take for granted the enormous costs associated with funding the federal agencies which provide services to the cruise lines free of charge.

 

 

WSVN-TV -

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Over Past 5 Years, Carnival Paid Taxes of Only 0.6% on Billions & Billions

Last night NBC Rock Center with Brian Williams aired a special on Carnival CEO Micky Arison who has a net worth reportedly of around $5,700,000,000.

One of the secrets to Arison's wealth is that his cruise line, Carnival, according to NBC News, paid around 0.6% in taxes at the federal, state, local and international levels over the past 5 years. That's less than 1% tax on all of the billions and billions in revenues collected from U.S. tax-paying citizens. 

Plus Carnival does not pay for the services provided by the U.S. federal agencies such as the U.S. Coast Guard or the U.S.Navy for responding to disasters at sea which disable Carnival cruise ships.

You can watch the video below produced by Tom Bettag and interviews by Harry Smith: 

 

 

Carnival CEO Micky Arison's Net Worth Increases from $4,700,000,000 to $5,700,000,000, Notwithstanding Costa Concordia Disaster

USA TODAY has an interesting article today entitled "Titans of the Cruise Industry See Net Worth Rise."

Forbes' annual ranking of the world's billionaires for 2013 lists Carnival mogul Micky Arison at No. 211 with a net worth of $5.7 billion, up from $4.7 billion a year ago.  Arison's net worth has nearly doubled from four years ago.

Another Carnival heir, Shari Arison, is now worth $4.2 billion, up from $3.4 billion just three years ago, according to Forbes.

Carnival operates over 100 cruise ship among 10 brands including Carnival, P&O Cruises, Princess Cruises, Holland America Line and Cunard.

How does cruise tycoon Arison get so rich?  

Registering his cruise lines in foreign countries (like Panama) to avoid U.S. corporate taxes, operating foreign-flagged cruise ships filled with employees from around the world who will work long hours for low wages, not reimbursing the U.S. government for millions incurred by federal agencies like the Coast Guard, Navy, etc., and offering peanut settlements to tax-paying U.S. citizens when his cruise ships sink or catch on fire may be part of the explanation. 

Micky Arison - Carnival Cruise Income - Tax

Art Credit:  Nickolay Lamm from MyVoucherCodes.co.uk

Leave a comment below or discuss the issue on our Facebook page.

Who Pays for the U.S. Coast Guard to Respond to Cruise Ships in Distress? You Do!

At this moment the 210 foot Coast Guard cutter Vigorous is escorting the disabled Carnival Triumph back to the U.S. The Coast Guard performs a remarkable job responding to emergencies such as cruise ship fires and the numerous helicopter medevacs involving ill or injured passengers who need medical treatment back here in the U.S.

But who pays for these services?  

Cruise lines have no obligation to pay the Coast Guard or other U.S. federal agencies for services like this. Most people don't know this. Many people also don't realize that the cruise industry pays no U.S. federal taxes because companies like Carnival and Royal Caribbean are registered in foreign Coast Guard Vigorous - Carnival Triumphcountries like Panama and Liberia and fly the flag of countries like the Bahamas.  The industry collects around $35 billion a year, mostly from tax-paying U.S. citizens. But unlike you or me, the cruise lines are essentially exempt from paying the U.S. government anything on all of the billions and billions it collects each month.

So when it comes to paying for a Coast Guard escort of a foreign flagged ship back to an American port, you pay. That's right. Joe the plumber pays. Even though the cruise lines pay no federal taxes and you do, you pay. Even when the cruise ship fire occurs due to the negligence of the cruise line, you pay. 

Remember the last cruise engine fire which disabled the Carnival Splendor in November 2010?  The U.S. sent out an aircraft carrier (U.S. Ronald Reagan) and various U.S. Coast Guard vessels. You paid for all of that too.

The CEO of the International Cruise Victims (ICV) organization Ken Carver, requested information from the U.S. Navy and the U.S. Coast Guard pursuant to a Freedom of Information Act ("FOIA") request. The U.S. Navy timely responded to Mr. Carver's FOIA request. The Navy disclosed that it delivered 60 pallets, weighing over 37,000 pounds, of "bread, luncheon meat, pop tarts, canned crab, water and paper plates."

Considering the cost of positioning an aircraft carrier, dispatching multiple aircraft and helicopters, and delivering tons of food and water to be dropped onto the cruise ship, the Navy stated that it spent $1,884,376.75 responding to the fire aboard the Carnival Splendor cruise ship. 

This figure does not include the costs incurred by the U.S. Coast Guard in responding to the crisis. Unfortunately, the Coast Guard has not yet provided any information in response to Mr. Carver's FOIA request dating back to earlier last year.

The Coast Guard's costs were undoubtedly another $2,000,000 or so in personnel and fuel costs for their vessels and helicopters.

I mentioned this issue last year in an article Your Tax Dollars At Sea - Who Pays When Things Go Wrong on Cruises? 

So here we are again with another foreign-flagged cruise ship disabled due to fire, operated by a foreign incorporated cruise line which pays no U.S. income taxes calling on good ole Uncle Sam to spend a few million dollars to bail it out.

Its time to re-examine why these cruise lines collect billions but pay no taxes and why you and me have to pay when their cruise ships catch on fire on the high seas and they call on U.S federal agencies for help.     

Cruise CEO Fain Bails On Royal Caribbean Stock For Over $11,500,000

Barron's reports that Royal Caribbean Cruises' top executive recently bailed out on a large block of cruise line stock just before the cruise line's shares touched a new 52-week intra-day high.

On December 13th Chairman and Chief Executive Officer Richard Fain sold 143,140 shares of RCL stock for $4,964,095, an average of $34.68 each. Barron's says that Fain followed up by exercising options and selling 188,443 shares for $6,535,203. 

The RCL stock is down over a point since CEO Fain bailed on the stock. Fain still holds 1,049,064 shares directly and 421,412 shares indirectly.

The last time we wrote about RCL's CEO was when he and other executives at the cruise line were sued for fraud for allegedly making false and misleading statements about the company's fourth quarter results for 2010. In January 2011, the day after touting the financial strength of the cruise line, CEO Fain sold 200,000 shares at a price of $46.63 for what the lawsuit alleges were total illicit proceeds of $9,326,000.  

Big bucks and cruise CEO's go hand in hand, irrespective of how the cruise industry is actually faring. A couple of weeks ago we wrote about Carniva's Micky Arison paying himself a bonus of $90,000,000 after what he describes as one of the one most challenging years for the cruise lines yet. 

Royal Caribbean Cruises CEO Richard Fain

January 4 2013 Update: The issue of cruise line executive compensation made our list of top ten stories for last year:

2012 was reportedly a difficult financial year for the cruise lines but you would never know it by looking at the huge sums of money, bonuses and stock options which the cruise line CEO's pay themselves. In contrast Fain' with his regular multi-million-dollar salary and the $11,500,000 from stock sales, Royal Caribbean's bar-servers were paid only $50 a month and required to work for tips carrying a dozen tropical drinks around the pool deck while balancing a bottle of rum on their heads

 

Photo Credit: Wall Street Journal Smart Money / by Jeffrey Salter / Redux 

Case Study: Royal Caribbean Cruises Ltd. - Avoiding U.S. Taxes, Labor Laws, Environmental Regulations & Criminal Accountability

Royal Caribbean Cruises - A Liberian CoporationToday I read an interesting case analysis from the Journal of Business Case Studies (May/June 2012), which studied the business model of the second largest cruise company in the world, Royal Caribbean Cruises, Ltd.   

The article is entitled "Royal Caribbean Cruises Ltd.: Innovation At A Cost?" (click on the pdf link)

The article focuses on Royal Caribbean Cruises Ltd. which was formed in 1997 when Royal Caribbean Cruise Line (founded in 1968) and Celebrity Cruises (founded in 1988) merged together. 

The article explains that the foundation of Royal Caribbean is the avoidance of U.S. taxes and regulation. It accomplishes this by:

  • Incorporating in a foreign country (Liberia, Africa), and
  • Registering its cruise ships in weak, poor and disorganized foreign countries (mostly Liberia and the Bahamas).  

By registering its corporation and ship overseas, it avoids U.S. taxes, labor and environmental laws, and criminal culpability.  U.S. executives are offered millions in bonuses while the cruise line itself pays no U.S. taxes, which is the key to its profitability. The Journal writes that Miami based cruise lines, like Royal Caribbean:

" . . .  take advantage of maritime laws to avoid paying U.S. taxes, gain immunity from American labor laws, avoid U.S. courts in workplace disputes, and fend off new environmental regulations, government records and industry reports show. They have done this by incorporating in Central America and Africa and registering their ships under the flags of foreign nations . . ." 

Although this theoretically gives tiny countries regulatory power over one of some of Florida's Flag of Convenience - Royal Caribbean Cruiseslargest corporations, the flag states " . . . are not only reluctant to discipline major contributors to their economies, but also do not have the resources to enforce regulations or even punish polluters."

Flying flags of convenience has historically been used to conceal criminal activities, and is now "used primarily for economic reasons and sanctuary from restrictive regulatory environments."

Tonight in England a documentary will air about the exploitation of crew members on the Eclipse cruise ship which is operated by Royal Caribbean's sister company, Celebrity Cruises, out of Southampton England.  Crew members work 12 hours a day (sometimes more), every day, every week for the length of their 6 - 8 month contracts with no time off. When injured, the crew members  are often dumped back in their home countries and paid only $12 a day and denied competent medical treatment.

You can trace the root cause of this abuse back to the earliest days of Royal Caribbean in the late 1960's when the cruise line decided to skirt U.S. laws by incorporating in the lawless country of Liberia.       

 

Don't miss:

"Celebrity Cruises Crew Member Controversy Brewing in Britain"

"Profits Over People: Carnival's Exploitation of Crew Members is Standard Industry Practice"

"Royal Caribbean Executives Get Richer While Crew Members Get Poorer"

 

Credit: Flags of convenience article - "Flags at Sea . . . "

Cruise Facts: Cheap Foreign Labor, No U.S. Taxes & Minimal Compensation to Dead & Injured Passengers

Jim Walker - Maritime Lawyer - Miami FloridaOver the past week, CNN has aired a number of special programs about the cruise industry, revealing a number of things that the industry would prefer you not know.

The segment below focuses on the cruise lines' efforts to avoid U.S  taxes,

By registering their cruise ships in foreign countries, cruise lines avoid most U.S. regulations and virtually all U.S. taxes. The CNN program points out that Carnival is registered in Panama; Royal Caribbean in Liberia; and Princess in Bermuda. Why? Primarily to avoid U.S. taxes.

Last year Carnival paid no U.S. taxes.  None.  Over the last seven years Carnival netted profits of over 11 billion dollars and paid a measly amount in taxes of barely over 1%.

The video shows some interesting comments by Senator Rockefeller (D - WVA) who presided over the hearing in the U.S. Senate about the Costa Concordia disaster. He stated that cruise ships are "getting away with alot."  They register overseas to avoid taxes; they hire cheap labor; they don't reimburse some 20 U.S. federal agencies for services rendered to the foreign cruise ships; and they pay the absolute minimum to passengers who are seriously injured or killed due to their negligence and recklessness.

There is a direct correlation between registering cruise lines in places like Africa or Central America and few safety regulations and lackluster regulatory bodies.      

CNN interviewed me for a short segment of the program where I discuss the extraordinary efforts cruise lines go to limit their liability by inserting onerous terms and conditions filled with legal "mumbo jumbo" to avoid paying fair compensation to injuries passengers and the families of the dead.      

The cruise industry may say that its priority is the safety of passengers, but as Senator Rockefeller said: the cruise lines' financial "bottom line" is the cruise lines' true emphasis.  

Watch the CNN video below:

  

Does Carnival Pay Its Fair Share of Taxes? Controversy Erupts At Carnival Annual Meeting

Carnival Cruise - TaxesCarnival held its annual meeting this morning at a hotel on Miami Beach. But today was different from the usually dull, self-serving pontificating by cruise line executives when a group demanding that Carnival pay its fair share of taxes appeared on the scene.

An organization called "1Miami" challenged Carnival and its CEO Micky Arison to pay their "fair share" of taxes.  Their presence caused an uproar with shareholders yelling at the protesters to be quiet and CEO Arison apologizing for the clamor.

Cruise lines avoidance of taxes is one of my favor topics.  Cruise lines like Carnival are registered in Panama to escape U.S. taxes.  According to the New York Times, Carnival paid taxes of only 1.1 percent of their $11.3 billion in profits over the last five years.  The issue is a hot one after Senator Rockefeller grilled cruise line executives at a Senate hearing last month why cruise lines use some 40 federal agencies yet avoid all U.S. taxes by registering their businesses and ships in places like Liberia and the Bahamas.

Micky Arison - Carnival - TaxesThis is a story I have written about a lot: Is Micky Arison A Greedy Corporate Pig?   Nothing subtle here.

You can also check out some other articles No Taxes - The Cruise Line's Dirty Little Secret or Your Tax Dollars at Work - Who Pays When Things Go Wrong On Cruises

The "controversy" was caused by the 1Miami grass roots organization simply asking Carnival to pay its fair share of taxes and help keep Miami afloat.

The Miami Herald reported Carnival's claim that it pays "head taxes" to ports around the world.  But this is hardly true; its the passengers who pay the port taxes.  Carnival just acts as a middle man. The Herald also writes that CEO Arison found the tax questions "insulting."  

Ah, a raw nerve.  Arison is very touchy about the issue of taxes. This is probably because he is the richest person in Florida.  And probably because of some slick and embarrassing tax maneuvering by his father, Ted Arison.    

Carnival was created by the senior Arison in the 1960's.  He raked in tens of billions of dollars from tax paying U.S. passengers, exploited the hell out of Caribbean crew members, and lived the good life in Miami. But he registered his Miami-based cruise line and his cruise ships in Panama to avoid U.S. taxes. In Micky Arison  - Mylin IV1990, he abandoned Miami, denounced his U.S. citizenship, and returned to Israel with his billions in a ploy to avoid estate and inheritance taxes.

Carnival should have seen the protesters coming from a mile away.  

Earlier in the week the 1Miami group protested about Carnival's non-payment of taxes while in small boats next to Arison's super yacht, the 200 foot Feadship Mylin IV, at the Miami Beach marina.

You can watch the video here.

Arison's personal yacht, by the way, is registered in the Cayman Islands - to avoid taxes.  

Your Tax Dollars At Sea - Who Pays When Things Go Wrong on Cruises?

This week the United States Coast Guard rescued two cruise passengers - one ill young man from the NCL Gem cruise ship sailing off the coast of North Carolina and a second young woman from the Explorer cruise ship who was suffering from an appendicitis attack near Key West Florida. 

When we report on these type of rescues, we sometimes hear from readers of Cruise Law News complaining that the cost of the medical evacuations should be borne by the sick passengers themselves. 

We especially hear these complaints when a passenger inadvertently goes overboard.  Was the passenger acting negligently or was he or she under the influence of alcohol (a major money Carnival Splendor Cruise Ship Fire maker for the cruise lines).  If so, many people protest loudly and angrily that the cruise passenger should bear the extra fuel expenses and other costs incurred by the cruise ship and the Coast Guard searching for the missing passenger.   

Federal agencies are prohibited by law from seeking reimbursement of the costs associated with search and rescue of this type. 

So who bears the expense when the cruise lines act irresponsibly and the cruise goes terribly wrong?

Consider the fire last year aboard the Carnival Splendor which caused the cruise ship to lose power off of the coast of Mexico.  The Carnival ship was disabled due to the negligent design of the cruise ship itself which risked the lives of 4,500 passengers and crew.  As we reported before, the U.S. Coast Guard blasted Carnival for its defective engines and poorly designed safety instructions which caused several thousands of passengers to find themselves helplessly adrift at sea without lighting, air conditioning or hot water on the high seas. 

Carnival quickly considered legal claims against the companies which designed and manufactured the engines which failed.  Carnival did not hesitate making a claim against these companies for the revenues lost while the Splendor sat in dry dock being repaired.

But who paid for the enormous costs associated with the U.S. Navy and U.S. Coast Guard responding to the emergency?  

You will recall that the U.S. Navy sent an aircraft carrier, the U.S.S. Ronald Reagan, to the scene as the mostly U.S. passengers bobbed around on the high seas.  The Navy utilized four aircraft and helicopters to assist the stricken Carnival ship.  The Navy made twenty-four airlifts of food and provisions which its aircrew skilfully dropped onto the Carnival cruise ship to feed the passengers.  

How much did this cost and who was paying for it? 

I inquired around and the only knowledgeable source was the International Cruise Victims ("ICV") organization whose President, Ken Carver, had requested information from the U.S. Navy and the U.S. Coast Guard pursuant to a Freedom of Information Act ("FOIA") request.

The U.S. Navy timely responded to Mr. Carver's FOIA request.  The Navy disclosed that it delivered 60 pallets, weighing over 37,000 pounds, of "bread, luncheon meat, pop tarts, canned crab, water and paper plates." 

Considering the cost of positioning an aircraft carrier, dispatching multiple aircraft and helicopters, and delivering tons of food and water to be dropped onto the cruise ship, the Navy stated that it spent $1,884,376.75 responding to the fire aboard the Carnival Splendor cruise ship.  

This figure does not include the costs incurred by the U.S. Coast Guard in responding to the crisis. Unfortunately, the Coast Guard has not yet provided any information in response to Mr. Carver's FOIA request dating back to earlier this year.

The Coast Guard's costs were undoubtedly another $2,000,000 or so in personnel and fuel costs for their vessels and helicopters.

There is a certain irony that cruise lines, which structure their businesses to avoid U.S. taxes and U.S. safety regulations, are dependent on the generosity of our Federal agencies in responding to emergencies when they get themselves into a jam.  

Cruise lines incorporate in foreign countries like Liberia and Panama and register their cruise ships in foreign Aircraft Carrier Ronald Reagan - Carnival Splendorcountries like the Bahamas in order to avoid U.S. laws and all U.S. income taxes. The cruise industry collects over $35,000,000,000 (billion) a year in income from mostly income-tax-paying-Americans, yet it avoids U.S. corporate income tax by incorporating itself and registering its ship abroad.

But when the cruise ships catch on fire and are adrift on the high seas, cruise lines like Carnival are the first to make a distress call to the United States and ask for favors from the U.S. Navy and U.S. Coast Guard. 

When cruise passengers were thinking of suing Carnival last year for the inconvenience caused by the cruise fire aboard the Splendor, I was the first one to say don't do it.  Many of the major news networks and newspapers picked up on the my don't-sue-Carnival message, like the Wall Street Journal, USA Today, Fox News,  ABA Journal, Gadling, and the U.K's Mirror.

At the end of the day, it was not the cruise passengers who filed suit.  It was Carnival who made legal claims against the companies which designed and manufactured its engines.  Carnival made millions in the process.

Did Carnival, the only one suing, repay the U.S. government?  

Not a penny.

So who paid for all of the millions of dollars in emergency services expended by our U.S. Navy and Coast Guard arising from the negligence of the tax-avoiding, foreign flagged and incorporated cruise line which stranded thousands of tax-paying Americans on the high seas?

You, the American taxpayers.    

 

For additional information about the Carnival Splendor fire and cruise ship fires in general, consider reading:

Carnival Splendor CO2 Firefighting System: "A Recipe for Failure"

"Coast Guard Blasts Carnival Splendor for Fire Negligence"

Ten Years of Cruise Ship Fires - Has the Cruise Industry Learned Anything? 

  

Photo credit:  bottom photo / U.S.S. Ronald Reagan - providencefox.com

Cruise Lines Owe Jamaica More Than $12,000,000 In Unpaid Taxes?

An interesting editorial appears today in the Jamaica Gleaner about a proposal to increase the head tax on visitors who arrive via air to Jamaica from $10 to $20. The writer characterizes this proposed increase as unfair considering the head tax on cruise passengers is only $2 per person.  These taxes help pay the Tourism Enhancement Fund (TEF) which funds projects that enhance Jamaica's tourism industry. 

Jamaica - Cruise Passenger - Head TaxBut the problem, according to the editorial, is that the cruise lines are refusing to pay Jamaica the head taxes collected by the cruise lines from the passengers:   

". . . the tax on cruise-ship passengers is US$2 per passenger, but the cruise lines mostly honour this obligation in the breach. They owe Jamaica more than US$12 million.

And unlike hotels, cruise lines pay little or no taxes in Jamaica and purchase little in the country."

Cruise lines already don't pay U.S. taxes themselves by incorporating their businesses and registering their cruise ships in foreign countries. 

Are the cruise lines charging head taxes on passengers who sail into Jamaica and keeping the money?  I'll ask the cruise industry's trade organization, the Cruise Line International Association ("CLIA"), for an explanation. 

Don't hold your breath waiting for its answer. 

 

Photo credit:  AOL Travel

Is Carnival's Mickey Arison a Greedy Corporate Pig?

Today the Move On organization published an article entitled "Pay Your Taxes?  These Ten Companies Didn't."   The article points out that while most of us U.S. taxpayers struggle to pay our fair share of taxes, there are certain corporations which have tax avoidance down to an art. 

The list is complied by Senator Bernie Sanders, an Independent from the state of Vermont.  His top 10 corporate freeloaders includes cruise giant Carnival corporation, which incorporated itself in Panama in the 1960s.  Ever since then, it has flown the flag of that country to avoid U.S. taxes, as well as to skirt U.S. safety regulations and wage and labor laws.

I have written about Carnival's extraordinary ability to avoid literally billions in U.S. taxes over the Mickey Arison - Carnival Cruise Line - Rich - Tax Avoidanceyears.  Is paying virtually no taxes vital to the survival of the cruise line?  Hardly, considering that its CEO Mickey Arison (photo circa 2000) is worth billions and billions.  Arison is the richest person in Florida today.  So why does he pay his injured and ill crew members slave wages?  He may not be the only cruise executive billionaire - take a moment and read Cruise Line Fat Cat Billionaires - but he certainly is the fattest.

Arison owns the Miami Heat and is paying basketball stars Dwayne Wade and LeBron James hundreds of millions of dollars, but he treats his crew employees like dog crap.

I am hardly Arison's harshest critic.  Ten years ago journalist Jim DeFede of the Miami New Times wrote a series of articles in which he asked the question "Is Mickey A Greedy Corporate Pig?"  DeFede also wrote some of my favorites "The Deep Blue Greed - The Arison Clan Built Carnival into a Money Machine by Cleverly Avoiding Tax Laws" and "Ten Questions for Micky."

DeFede left the Miami New Times long ago, and we don't have his blunt questions to consider today.  Over the past decade Arison's personal worth increased from $1,700,000,000 to over $4,100,000,000 last year, while Arison convinced the city of Miami to build him two basketball arenas in the process.

So I'll ask the same question DeFede asked 10 years ago: Is Mickey a Greedy Corporate Pig?

In arriving at your answer, consider that Carnival pays disabled crew members receiving medical treatment in their home countries a daily stipend of only $12 and expects them to find lodging and pay for their food and living expenses.  You can't buy a beer and a hot dog at the Miami Heat game for $12 . . .  

 

Photo:  AP/Wide World Photo via Miami New Times
 

No Taxes - The Cruise Lines' Dirty Little Secret

One of the little know facts about the cruise industry is that it pays virtually no U.S. taxes.

The cruise lines take advantage of an obscure provision in the U.S. tax code which permits shipping companies to evade taxes by incorporating overseas and flying the flags of foreign countries.  That's why Carnival is incorporated in Panama, Royal Caribbean is incorporated in Liberia, and Princess Cruises is incorporated in Bermuda. 

The New York Times covered the issue of cruise line taxes today:

"The Carnival Corporation wouldn’t have much of a business without help from various branches of the government.  The United States Coast Guard keeps the seas safe for Carnival’s cruise ships. Customs officers make it possible for Carnival cruises to travel to other countries.  State and local governments have built roads and bridges leading up to the ports where Carnival’s ships dock.  

Mickey Arison - Carnival Cruise - No TaxesBut Carnival’s biggest government benefit of all may be the price it pays for many of those services.  Over the last five years, the company has paid total corporate taxes — federal, state, local and foreign — equal to only 1.1 percent of its cumulative $11.3 billion in profits.  Thanks to an obscure loophole in the tax code, Carnival can legally avoid most taxes."

I have written about the cruise industry's ability to avoid U.S. taxes since starting this blog.

Carnival was created by Ted Arison (father of current CEO Mickey Arison, photo right).  Senior Arison collected billions of dollars from tax paying U.S. passengers and lived the good life in Miami.  But he registered his Miami-based cruise line and his cruise ships in Panama to avoid U.S. taxes.  In 1990, he abandoned Miami, denounced his U.S. citizenship, and returned to Israel with his billions in a ploy to avoid estate and inheritance taxes.

Whenever I think of cruise tycoons like the Arisons and the foreign cruise lines like Carnival and Royal Caribbean, I can't help but think what a scam they are running.    

The Miami-based cruise lines file papers of incorporation and vessel registration in distant countries where no one will bother them with things like income tax, wage and labor laws, or safety regulations. They then collect billions of dollars a year from hard working saps - the U.S. tax paying public. 

 

Like this article?  Consider reading: 

Cruise Line Fat Cat Billionaires 

What the Cruise Industry Has to Learn From My Cousins Back in Arkansas

 

Credits: Mickey Arison - David Adame AP (via Cruise Blog)

Top 10 Reasons Not To Cruise

The popular on line cruise community CruiseCritic.com recently ran an article "Top 10 Reasons To Cruise."  By the time I read reason number 3 - "Cruise Ships are Family Friendly" - I was repulsed enough that I felt compelled to explain why the Cruise Critic article was dangerously inaccurate.

Cruise Critic published the photo (below) of the "family friendly' environment touted on cruise ships, with the photograph courtesy of Royal Caribbean Cruises.  Unfortunately, Royal Caribbean has by Top Ten Reasons Not To Cruisefar the worst problem with sexual predators of any line we have ever seen. Children have been targeted by sexual predators in child centers and raped after leaving the centers and trying to get back to the cabins.    

No parent would ever send their kids to a teen center or leave them alone in a cabin if they knew what this cruise line knows - that sexual assaults occur frequently on cruise ships.    

So here's the other side of the story - 10 Reasons Not to Cruise:

No. 1: Cruise Lines Are A Perfect Place To Sexually Abuse Children

No. 2: Cruise Ships Are A Perfect Place to Commit A Crime, And Get Away With It!

No. 3: Carnival, Royal Caribbean And NCL Are Corporate Felons

No. 4: If You Are A Victim On A Cruise Ship, The Cruise Line Will Treat You Like A Criminal

No. 5: If You Are Retired Or A Child, The Cruise Line Considers Your Life Worthless

No. 6:  If The Ship Doctor Kills You, Too Bad

No. 7:  Cruise Lines Exploit Foreign Crew Members, Like You'd Never Believe

No. 8:  Blackwater, Blackwater, Blackwater

No. 9:  Bunker Fuel - Nasty Tar Sludge!      

No. 10:  Cruise Lines Avoid All U.S. Taxes By Registering in Places Like Panama and Liberia.

If travel agents are going to hawk cruises by advertising all of the reasons why you should take your family on a cruise, trust us that we will provide you with the other side of the story. 

Make your own informed decision how to spend your vacation with your family.   

Tomorrow, we will discuss "Why Cruise Lines Are a Perfect Place to Sexually Abuse Children."

 

Credits:

Photograph          Royal Caribbean Cruises (via CruiseCritic.com)

Power to the People of Alaska

The Anchorage Daily News has an interesting editorial today by Alaska resident and green water scientist Gershon Cohen entitled "Power to the People, Not the Cruise Industry."  He characterizes Governor Parnell's decision to reduce the cruise "head tax" from $46 a cruise passenger to only $19 as a sell out to the Miami-based cruise lines.

Dr. Cohen is right.  The citizens of Alaska voted for the tax to protect their state and its beautiful waters from exploitation and pollution by cruise ships operated by Carnival and Royal Caribbean and their subsidiaries - Celebrity, Holland America Lines, and Princess Cruises.  Governor Parnell's unilateral decision to dump 60% of the cruise tax approved by Alaskan voters raises the Cruise Ship Pollution - Alaskaquestion - who is calling the shots here?  The people of Alaska or Carnival's tax-avoiding Mickey Arison

Dr. Cohen has a right to be sensitive about Carnival's control over the politics in Alaska.  When Dr. Cohen was appointed to a waste water panel which regulated cruise ship emissions, the cruise industry complained and Dr. Cohen was unceremoniously removed.      

I written many articles about how foreign incorporated cruise lines pay zero federal taxes on the $35,000,000,000 (billion) in cruise fares from mostly U.S. tax-paying citizens - by flagging their cruise ships in foreign countries.  And there is no doubt that the cruise lines are making money hand over fist.  Just the other day, Forbes announced three cruise tycoons as some of the richest people in the world - "Cruise Line Fat Cat Billionaires."

The Miami cruise lines may be rich, but its the people of Alaska who have the power.  Unless they want to follow Governor Parnell's lead and roll over and play dead for Mickey and his Miami-based cruise ships. 

 

Additional Information to Consider:  In 2009, Alaska issued a record number of waste water violation notices to the cruise industry.  The citizens of Alaska are smart to assess a fair tax against these cruise ships to protect their waters and support the state's infrastructure. 

The major polluters and violators of Alaska's environmental laws were Princess Cruises (photo above) and Holland America Lines (HAL). Listen here for audio from a local NPR station in Sitka, Alaska.

 

Credits:

Princess cruise ship                  Ed Schoenfeld (via NPR KCAW-FM)

Cruise Line Fat Cat Billionaires

Royal Caribbean - Crew Member - $545 a Month A fascinating article appeared in USA Today's Cruise Blog by Gene Sloan - "Titans of the Cruise Industry See Their Net Worth Soar."

This is an amazing article reporting on the Forbes 400 richest people in the U.S., which includes Carnival fat cat billionaires Mickey Arison, Royal Caribbean's Pritzker family, and entrepreneur Leon Black whose private equity firm controls Norwegian Cruise Lines, Oceania Cruises and Regent Seven Seas Cruises. 

The article which is re-printed in its entirety below is an insight into how to create a fortune by convincing tax paying Americans to turn over their hard earned money to foreign incorporated, non-tax paying companies operating foreign flagged cruise ships. 

The phenomenon is of particular interest to me because I represent the backbone of the cruise industry - crewmembers like Ismael Richards (photograph above) who worked for 14 years - over 350 hours a month never making more than $545 a month until his back failed and he was abandoned by the cruise line.

Mr. Richards found himself with an one-way ticket back to St. Vincent, disabled, with no 401(k) plan, no pension, no job prospects, no social security and no social safety network.

So here is the article about cruise line billionaires, for your prurient interests:  

"The past year has been a good one to be a titan of the cruise industry. Just ask Micky Arison Mickey Arison - Carnival Cruise Line - Billionaire (photograph right).

A year ago, as cruise stocks were plunging along with the economy, wealth watcher Forbes was pegging the Carnival mogul's net worth at just $2.9 billion -- a multi-year low. But with the industry on the rebound, Arison's fortunes once again are on the rise.

Forbes' annual ranking of the world's billionaires for 2010, out late Wednesday, puts Arison's net worth at $4.4 billion, placing him at No. 189 on the magazine's closely-watched list. A year ago he ranked at No. 221.

Arison still has a long way to go to reach his former glory. As recently as four years ago, when the cruise business was riding high, Arison's hefty stake in Carnival had landed him among the 100 richest people in the world. In 2006, Forbes estimated Arison's net worth at more than $6 billion, putting him at No. 94 on the list. He ranked at No. 129 in 2007 and No. 189 in 2008.

Micky Arison isn't the only Arison whose fortunes are rebounding. Another Carnival heir, Shari Arison, is now worth $3.4 billion, up from $2.7 billion a year ago, according to Forbes. Alas, Shari Arison's rising wealth isn't enough to keep her in place in the rankings, where she has dropped to No. 277 from No. 234 in 2009. Four years ago she was within striking distance of the Top 100 at 109.

Another would-be cruise mogul, Leon Black (photograph below, left), also is doing better. The self-made financier who controls Apollo Management -- the private equity firm that in turn controls Oceania Cruises, Regent Seven seas Cruises and Norwegian Cruise Line  -- almost didn't make Leon Black - Norwegian Cruise Line - billionairethe Forbes list last year as his net worth plunged to just $1.1 billion. But this year he's on the rebound with a net worth that Forbes pegs at $2.5 billion. He now ranks No. 277 on the list, up from No. 647 a year ago.

Also faring better are the many members of the Pritzker family of Chicago who collectively own a sizable chunk of Royal Caribbean.  Forbes says Thomas Pritzker is now worth $1.6 billion, up from $1.3 billion a year ago (though his ranking on the list has fallen to No. 616 from No. 559 in 2009). Jay Robert Pritzker, Anthony Pritzker and Penny Pritzker, with $1.4 billion a piece, are next at No. 721, followed by a half dozen more Pritzkers who tie at No. 773."

 

 

Credits:

Ishmael Richards                 Jim Walker's Flickr photostream

Mickey Arison                         Business Week

Leon Black                             Adam Berry / Bloomberg / Lardov

Cruise Industry Exaggerates Effect of $50 Alaska Tax and Hides Financial Information

The so-called "Alaska Cruise Association" (more properly called the Miami Cruise Association) has been caught exaggerating the effects of Alaska's $50 per person "head tax." 

The Juneau Empire reports in an article by Pat Forgey entitled "Attack On A Tax" that the cruise industry is misleading the public.  Cruise lines claim that cruise prices have dropped as low as $300, and the $50 tax is driving passengers away from cruising to Alaska.

The newspaper reports that cruise passengers actually pay around $2,000 a cruise. Also, most passengers believe that a $50 tax is negligible and has no have an effect on their decision to book a cruise.

The most revealing and disturbing part of the article is that cruise industry spokesman, John Binkley, considers financial information regarding cruises to Alaska to be "proprietary and confidential."  The cruise industry keeps the information secret notwithstanding the fact that both Carnival and Royal Caribbean, which carry 80 percent of the cruise ship passengers to Alaska, are publicly traded companies which are required to report financial data to the Securities and Exchange Commission.

This is business as usual for the cruise industry.  Its credibility for facts is historically dubious. Cruise lines are the least transparent industry by far.  As I have reported in previous articles, the non-tax paying and polluting cruise industry's real motivation to to punish Alaska for its strict pollution regulations

Another newspaper in Alaska reported on the cruise industry's big lies. The Alaska Daily News calls the $300 cruise ticket a "myth" perpetuated by the cruise industry.  The two comments to the story sum up the truth about the cruise industry's attack on Alaska:

  • "Multi-national cruise ship hirelings in Alaska beat this big lie about the $50 head tax and its impact on passenger decisions to death and lost all credibility as a result . . .  Alaska's regulations are a model for other places and this scares the industry."
  • "No surprise here, other than the cruise industry got caught telling tall tales."

 

 

Photo credit:

Polluting cruise ship     www.ecollo.com