Senator Introduces Bill That Would Raise Taxes on Cruise Line Revenue

August 2, 2013

(1:08 p.m. EDT) -- Senator Jay Rockefeller introduced two bills to Congress yesterday that would close what he calls a tax loophole and force cruise lines to pay more U.S. taxes.

The bills "change the treatment of the revenue that foreign-based cruise lines earn from ships that embark or disembark passengers in the United States," he explained in a summary of the Cruise Income Tax Loophole Repeal bill. Because the cruise companies are organized as foreign corporations, despite having headquarters and most of their employees in the United States, their revenue is protected by an exemption in the tax code specifically created for cruise lines. Therefore most of their income is not subject to U.S. taxes.

The Rockefeller bill aims to eliminate the special exemption for cruise industry income derived from sailings that embark or disembark passengers in the United States. Furthermore, according to the Miami Herald the Excise Tax on Cruise Income bill also would impose a 5 percent excise tax on gross income on those voyages. The money raised by the tax would go to improve the country's transportation infrastructure.

According to Rockefeller, the cruise lines have been operating "for free" in the United States but avail themselves of assistance from the U.S. Navy and Coast Guard when their ships are in distress.

"The cruise industry pays little or no income tax in the United States," he said in the bill's summary.

"It costs money to send the Coast Guard to tow their drifting ships and it costs money to maintain the ports they use," he added in a press release introducing the legislation. "Cruise lines need to start paying their fair share of taxes and stop expecting everyone else to foot the bill."

Cruise Critic has reached out to several cruise lines for reaction to the proposed legislation.

A spokesman for Cruise Lines International Association told Cruise Critic, "CLIA and its members are reviewing the legislation."

--by Dori Saltzman, News Editor