Tax on Passengers Is a Lot of Garbage, Cruise Ship Lines Say

When the island nation of Grenada notified Carnival Cruise Lines that it had to increase the country’s arrival tax by $1.50 per passenger this spring, it didn’t seem a lot to ask of the Miami-based giant; its parent company registered profits of more than half a billion dollars last year.

Besides, Grenadian Prime Minister Keith Mitchell said, the increase was for a noble cause: a new sanitary landfill that would help keep his island pristine for future generations--and for the tens of thousands of U.S. and European tourists that Carnival brings each year.

What is more, Grenada had no choice. The $1.50-a-head tax for all cruise lines was mandated for Grenada and five other eastern Caribbean countries by the World Bank, which is helping finance new landfills for each nation provided they use the new tax revenues to run them.

But Carnival’s response last month helped draw the battle lines in a controversy that has polarized the interests of the booming Caribbean cruise industry and those of cash-hungry island states that depend on it.

Last month, Carnival responded by telling Grenada that if it imposed the new landfill tax, the company would take its passengers elsewhere.

After several inquiries by The Times and a day of intensive negotiations this week between Carnival and the World Bank, a company spokesman said Wednesday: “It looks like we will accept the $1.50 in the case of Grenada, to help the country deal with its garbage problem.”

But Tim Gallagher, Carnival’s vice president for public relations, added that the cruise line still views the new tax as unfair and a dangerous precedent for a company that disposes of most of its solid waste on board its modern fleet.

He said Carnival has yet to decide whether to pay the tax in the other five nations that agreed earlier this month to impose it starting May 1.

“We do not mind paying for something if it’s a service being provided for us,” he said. “But we do not want to pay for facilities we don’t use.”

Gallagher conceded that $1.50 a head--on top of the current $3 arrival tax, the lowest in the region--seems paltry. But he stressed, “The reason that Carnival Corp. makes the kind of money we do is because we pay great, great attention to controlling our costs.

“Sure, it’s just $1.50. But it’s $1.50 here, then $1.50 there, then $1.50 over there. When you allow people to unfairly charge for things, then you open a Pandora’s box.”

“What Pandora’s box?” responded Maria Donoso-Clark, head of the World Bank’s environment section for Latin America and the Caribbean, which is sponsoring the landfill project.

“My guess is that nobody would object to paying $1.50 to help protect these islands, which are so fragile and so dependent upon tourism,” she said. “We’ve tried to impress upon the cruise lines that most of the passengers of their ships are Americans or Europeans who are very conscious of the environment.”

The $50-million project to build landfills looked much simpler on paper when the World Bank approved it three years ago. The agency agreed to help fund their construction in Grenada, St. Lucia, Antigua and Barbuda, St. Kitts and Nevis, Dominica, and St. Vincent and the Grenadines, but it insisted that the islands raise a separate fund to manage them. So the $1.50 tax was imposed on all tourists and returning residents.

The islands’ prime ministers criticized the cruise executives for what they called a divide-and-conquer strategy, playing one government against the other in a region where the islands compete for the tourist dollar.

“We became disunited, and they remained united, picking us off one by one,” St. Vincent Prime Minister James F. Mitchell said at a meeting of the six leaders earlier this month.

Grenada was especially vulnerable. Its only cruise customer is Carnival, and it lacks modern port facilities, although construction on a multimillion-dollar dock for cruise ships will begin there soon.

Grenada’s Mitchell conceded earlier this month that he had “buckled” to threats of a cruise boycott late last year, saying he delayed the original Dec. 1 deadline for the tax after he was “bombarded” by protests from local taxi drivers. But he led the Caribbean group this month in pledging solidarity in imposing the new tax.

“We, as leaders,” he said, “have a responsibility to the future generations of our countries.”