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HomeNewsArchivesTask Force Will Likely Seek Head Tax Increase

Task Force Will Likely Seek Head Tax Increase

April 6, 2006 – A head tax increase on cruise ship passengers seems inevitable, but the increased amount and the terms remained undetermined after a meeting Thursday night on St. Thomas called to get input from those who will be affected by a new agreement between the V.I. government and the Florida Caribbean Cruise Association.
Initial testifiers, wary of upsetting the cruise lines with a head tax increase, capitulated to the idea when Cruise Ship Task Force member Pamela Richards, who is also the Tourism commissioner, asked each one directly, "Who should pay – the residents or the cruise ships?"
The head tax – which goes to support the port's infrastructure – has not been increased for more than 12 years.
No one on the task force directly answered a question from retailer Cynthia Gustafson about whether or not the cruise lines had threatened to pull out or divert ships if an increased head tax were imposed, but Michelle Paige, FCCA president, who was in the audience, said in an inteview, "They're playing with fire."
Paige was adamant that the Virgin Islands, at $7.50 per head, is already getting more than any other Caribbean destination. Doing the math, at two million passengers a year multiplied by $7.50, Paige said the territory is getting $15 million a year. "What are they doing with it?" she asked.
Among other things, dredging, increasing the strength of the West Indian Co. dock, building a shopping mall at Crown Bay and beautifying Frederiksted was the answer from WICO president and task force member Edward Thomas. Thomas said WICO has spent $10 million preparing his docks and the harbor for megaships. "The dock was built for 10-ton ships," Thomas said. "These are 150-ton ships."
Increased security since 9/11 combined with other things have driven WICO's costs up 30 to 40 percent since the last agreement was signed, Thomas said.
He said he was certain a tax was going to have to be implemented but said it should be done in increments over a period of years.
Of the current $7.50 head tax, $3.50 goes to WICO if the ship is at its dock. The remaining $4 goes to the V.I. Port Authority. VIPA gets the entire $7.50 if the ship is anchored in the harbor or docked at VIPA's Crown Bay facility.
Retailers, taxi drivers, tour operators and store promoters agreed the Virgin Islands, in particular St. Thomas, has to improve its infrastructure in order to keep passengers coming, but several testifiers believed passengers would always choose St. Thomas.
Taxi driver Ricardo Dessout said the passengers tell him, "The Caribbean is the most beautiful place they've ever been, especially St. Thomas." He said he is convinced they will keep coming back. "We can compete with any other destination," he said, "we need to know that."
But V.I. Taxi Association President Winston Parker saw things differently, "We have to be very careful," he said of the possibility of a head tax increase. "We can't afford to lose even 10 people."
Part of what has retailers miffed is that the ships are selling many of the same items and products onboard as are being sold on island. And Gustafson says the ship's stores are telling people to go ahead and take an island tour but to buy their gifts and souvenirs on the ship.
Paige agreed that is a problem. "We don't run our own shops," she said, adding that addressing the problem of onboard ship stores competing with local retail operators could be part of a "partnership" agreement.
Paige and most of the testifiers were in agreement where traffic is concerned. Paige said "the ability to move passengers is a problem."
She said, "You have to give them options."
Paige said many passengers "go back to the ship early because they're afraid they are going to be left behind," referring to the fear of getting caught in late afternoon traffic – which many do.
Paige said St. Maarten has stepped up to the plate in that regard. She said they are using water taxis and have built a boardwalk. "St. Maarten is putting all their money into infrastructure."
She said St. Maarten's cruise ship traffic has increased more than 70 percent in the five years since the last agreement was signed with the Virgin Islands. St. Thomas traffic has increased just under 10 percent, she said.
Richards took up the water taxi theme at one point asking testifiers what they thought of the idea. Most were all for it, but not surprisingly Dessout said "personally" he was against them.
The competition most taxi drivers feel they would face with the development of water taxis has long kept the issue at bay.
Meetings have been held on all three islands this week so that task force members could get feedback from the community on how to fashion the impending agreement.
Some concerns about St. Croix were expressed at Thursday's meeting. Despite the best efforts of the V.I. Port Authority to dredge the Frederiksted harbor, provide security lighting and spruce up the town, cruise ships have all but disappeared. Furthermore, the ships pay no head tax when stopping at St. Croix.
The agreement struck in 2001 called for a 25 percent increase in calls to St. Croix, but Paige said all bets were off due to safety concerns and the fact it has taken five years to get the dredging project going.
On St. Thomas, people also want to see – along with a solution to the congestion – more bathrooms, more trash receptacles, and more hospitality training.
James O'Bryan, task force member, island administrator and Government House spokesman, voiced the question on everyone's mind, "Somebody, somewhere has to pay for it," he said. "Where is that money going to come from? "
All of the task force members, including Sen. Lorraine Berry, Robert O'Connor, and chairman George Goodwin were in attendance.
Also offering testimony were Ron Smith, a Havensight store owner; John and Adam Reeves of Cruise Ship Excursions; Sandra Pomeroy, Main Street store promoter; and Barbara Petersen of Cardow Jewelers. Gustafson read a prepared statement from candle maker and community activist Jason Budsan.
The current agreement expires on April 30.

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