scale, a Bretton Woods-like realignment of these nations debt would also be of critical assistance. From the perspective of the cruise industry serving the Caribbean, I would like to recommend a specific step which I believe could increase the flow of cruise passengers visiting the Caribbean by at least 15 and up to 20% almost immediately. That step would be to include the international cruise ships serving the Caribbean in the tax deductibility for conventions which has been offered to the Caribbean basin nations. Many of those nations do not have the infrastructure for facilities to serve large, medium or even smaller conventions. Cruise ships, which also do not serve large conventions but have served business meetings and conventions for groups up to 500 persons, can bring those groups to all the islands of the Caribbean. The Caribbean Tourism Association Board of Directors, comprised of the Ministers and Directors of Tourism from all the Caribbean basin countries, plus Puerto Rico and the U.S. Virgin Islands, passed the following resolution at their 1984 annual meeting: WHEREAS cruise ship passengers represent important tourism revenues to countries in the Caribbean basin; and WHEREAS, Section 274 (H) (2) of the U.S. Internal Revenue Code has excluded tax deductions for business meetings and conventions aboard cruise ships serving the Caribbean and thereby removed a significant portion of cruise passenger markets and revenues of both the cruise lines and Caribbean countries; BE IT RESOLVED, that the Caribbean Tourism Association's Board of Directors urge the U.S. Government to amend Section 274 (H) (2) to grant to conventions on board cruise ship deductions similar to those granted to land based conventions. True, all of the ships currently serving the Caribbean are owned and financed by foreign interests. But just as there is no distinction between tax deductibility for hotels in the United States which are owned by foreign interests or on the Caribbean islands for hotels which are owned by U.S. or other interests, I believe that the current prohibition of tax deductibility for international cruise ships is detrimental to the development of cruise ship business and tourism in general in the Caribbean area. I can speak from some very hard experience in this matter. When this current legislation prohibiting tax deductibility for business meetings or conventions on cruise ships was introduced in 1980, my company subsequently lost $38 million through cancellations of business already on our books. We estimate that we have conservatively lost another $120 million in lost revenue opportunities in the five years since that time. Since business meetings and conventions comprised 18% of our business in 1980 and and was receiving ever increasing attention because of the increasingly competitive nature of our industry, I can therefore state the basis for saying that Caribbean passengers would increase by at least 18 to 20% if this prohibition were removed. The U.S. Treasury Department has publicly recognized that the revenue implications in granting tax deductibility to cruise ship meetings and conventions would be negligible. On the other hand, this change would act as an incentive for cruise lines to increase the number of Caribbean cruises and, because of the keen competition among lines, lead to more ports being visited by cruise ships than presently. Therefore, to allow this tax deductibility for meetings and conventions on cruise ships sailing in the Caribbean basin would be of immediate benefit to the cruise industry and even more to the Caribbean nations. |