Senators, cruise industry officials and retailers seem to be steering toward a compromise position on the head tax on cruise ship passengers embarking in St. Thomas.
This is a healthy development.
A majority of senators have endorsed raising the head tax from $7.50 to $10, with the additional $2.50 going into the General Fund to pay for infrastructure improvements, improved police protection and tourism promotion. Cruise line officials vehemently oppose any increase, as do retailers dependent on cruise ship business.
But an acceptable middle ground would allow all sides to gain something and save face in this dispute.
Most senators believe, and we agree, that the cruise industry, which pays virtually nothing in U.S. taxes, should contribute more to maintain St. Thomas as the premiere destination in the Caribbean. But that could come in two forms: a slightly higher head tax – possibly $1 or $1.50 rather than the full $2.50 being proposed – or direct contributions toward specific projects such as beautifying downtown Charlotte Amalie and the waterfront.
One proposal made at this week's Finance Committee hearings was for a slight increase in the head tax and a redistribution of the money collected.
As it now stands, the West Indian Co. Ltd. gets $3.50 and the V.I. Port Authority gets $4 of the $7.50 collected on ships that come into the WICO dock. The Port Authority gets the entire $7.50 from ships that dock at Crown Bay or anchor in the harbor. The V.I. government gets nothing, period.
If the head tax were increased to $9, that amount could and should be split evenly among WICO, the Port Authority and the government.
That would mean a slight reduction for WICO, which is, however, a money-making operation, and a more sizeable decrease for the Port Authority. In the Port Authority's case, this could cause some problems – but we'd like to see the authority come up with a belt-tightening plan, including a drastic reduction in off-island travel for its top officials and board members who now travel whenever and wherever they want.
Another alternative is for the cruise lines to pay for major capital or other projects but maintain the $7.50 in passenger fees at that level. If that is the agreed-upon approach, we still believe the $7.50 should be redistributed evenly among the three V.I. entities.
At this point the key players seem to see the possibility of compromise. Their challenge is to fashion that compromise so all sides benefit.