Carnival Corp., the world's largest cruise ship company, earned $2 billion in profits over the last three years but paid less than 1 percent in income taxes, the New York Times reported Friday.
Royal Caribbean Cruises, the second-largest cruise company, reported profits of $657 million over those three years, yet its financial statements don't mention paying income taxes.
The Times report says, "Doing business under a decades-old loophole in the federal tax code, and protected by an increasingly powerful lobbying force, the 17 major cruise lines pay practically no income tax even though they are based in this country and 90 percent of their passengers are Americans. The cruise lines, all of them registered in foreign countries, do not observe the nation's labor laws, minimum wage law and many environmental and safety regulations."
The report points out that cruise lines pay more than $66 million a year in fees to American ports, though it does not say whether the Virgin Islands is included in that tally.
And it says a new study done for the industry concluded that "cruise lines bought $6.6 billion worth of American goods and services in 1997, generating 176,433 jobs."
The Times report focuses on growing national concern about the impact of megaships on the environment and on the foundering American maritime industry, which can't compete with foreign flag vessels when it comes to taxes, wages or construction.
For instance, if Carnival were an American corporation paying taxes at the 35 percent rate, it would have paid about $700 million in taxes over the past three years. Instead, it is registered in Panama, which has no business income tax, and Carnival paid only $15 million in income taxes on the earnings of one division that runs hotels and tours in the United States, the Times reported.
The International Council of Cruise Lines spent $557,023 on lobbying in 1997, the story says, and in 1997-98 donated $166,146 to House and Senate candidates.
The results are evident, the Times notes, citing a budget bill where the addition of the word "state" and a comma saved the cruise lines as much as $20 million a year in passenger fees.