Tax payment plays a critical role in all industries and, therefore, should be regulated by set policies. Taxes are very crucial in governance in many ways, as will be outlined in the paper. Failure to comply with the terms spelled in tax systems will lead to problems in the governing process. The present economic situation of the Caribbean is unstable, and cities are in a collective search for the best solution. The tourism industry has been considered as a possible solution to the economy of Caribbean governments. The Caribbean has beautiful scenery which attracts tourists from all over the world. The tourism industry will have positive impacts on the economic, social, and political sectors in the Caribbean. There are many other industries that are linked with tourism. For example, an increased rate of tourism in the Caribbean would mean increased chances of investment and profitability in the hospitality business in the region (Dwyer, Douglas & Zelco, 2004). However, the whole plan by Caribbean governments is a whole burst of a burble because their economy is even worse. This paper will discuss how Caribbean governments have invested in the tourism industry along the cruise lines. In addition, various ways in which cruise lines have benefited from the investments by Caribbean governments will be outlined.
The Caribbean governments have invested in the cruise lines with the hope that the tourism industry will boost their economies. On the contrary, the benefits are being enjoyed by cruise lines with minimal returns to Caribbean governments. In what Caribbean governments perceived as being a help to their economic situation, more doom is spelled. Deterioration of the Caribbean economy is a result of cruise lines failing to perform their duty in payment of taxes. The cruise industry has been successful due to the huge contributions by Caribbean governments. The industry has registered rapid revenue growth over the past two decades. Consequently, the industry has been expanded through the establishment of infrastructure that is related to its activities. For example, in 1998, Caribbean governments spent $ 2 billion in establishing the six cruise lines. Studies show that 60% of the profits made by the Cruise industry come from the surrounding cities. As a result of the enormous contribution by Caribbean governments in increasing profitability margin, the tourism industry in cruise lines is now a booming business. People from cruise lines access the islands frequently and freely as most of their activities are onboard. Cruise lines further suppress the benefits of Caribbean governments as they purchase tourist slots from them and resell them at higher prices ashore (Dwyer, Douglas & Zelco, 2004).
The cruise lines are reaping all the benefits brought by the tourism industry in the exclusion of Caribbean governments. Tourism has a lot of profitability in the cruise industry, which should be shared evenly in the Caribbean. The doubling of the revenue profit in the cruise industry between 1997 and 1998 manifests its prosperity (The Associated Press, 2003). It should be noted that at the time when profits in the cruise industry are in escalation, the economic situation in the islands is critical. Related industries like hospitality are also not exempted. Studies and interviews conducted among the Caribbean residents pointed towards high taxes as being the cause of economic deterioration. Caribbean governments led cruise lines to economic prosperity by investing in them. The industry should, therefore, contribute to the reinstatement of economic stability in the Caribbean by paying taxes. However, the industry completely refuses to yield to strategies organized to increase tax. To ensure that governing process is not affected, the Caribbean governments have increased their share allocation of tax (Braun, Xander, James & Kenneth, 2002).
Despite the investments by Caribbean governments, benefits are being enjoyed by cruise lines. In addition, Caribbean governments are at peril of a worse economy than before. Caribbean governments are investing more in cruise lines while they are getting little revenue from them. For example, by 1998, Caribbean governments had spent $28 billion in both expansions of terminal cruise and tourism promotion. Notably, the overall tax contribution by cruise lines in 1998 was only $ 1.9 million. In addition, only 7% of employees in the Cruise industry come from Caribbean cities. Out of the tax paid by the employees in the cruise industry, only 1% gets to Caribbean governments (Sheller, 2003). Cruise lines are using the scenery to their own advantage while the key investors in the industry get nothing in return. Efforts to get cruise lines to pay higher taxes have been unfruitful. The people in cruise lines threaten not to come to islands in case taxes are increased. The Caribbean governments that had organized the strategy disintegrated after failing to convince the cruise industry of the need to pay more taxes. In addition, the interviews revealed that the cruise lines were charging their customers at a higher rate than Caribbean cities. For example, a tour to cruise lines would be charged at $64 by carnival cruise taxi while that from the islands charged $20 (Barry, Beth & Deb, 1984).
Caribbean cities are on the verge of losing their market share as they will not be able to match the competition. Even with the increased profits in the shipping and tourism industry, other related businesses in the Caribbean will collapse if the trend is not rectified. The present condition has been triggered by unbalanced payments of taxes. Even with high tourism rates, hospitality businesses will not flourish due to the imbalanced operational costs. This could be felt later by cruise lines because when the supply fails to meet demand, there will be crises. If the related industries like hospitality were to collapse due to heavy payment of taxes, tourists would also stop visiting cruise lines. It cannot be denied that Caribbean governments do not enjoy the benefits that are associated with the beautiful landscape. According to the Caribbean governments, the investment in cruise lines has been one of the many failures in the efforts towards reinstating economic stability. It is also regarded as a strategy with the most devastating effects on Caribbean governments (Robert, 2000).
The investments by Caribbean governments bring not only capital loss but also instability of the individual businesses. The cruise industry operates in almost a free tax system and competes with Caribbean businesses that are taxed heavily. Caribbean governments would only enjoy the benefits of their investments if the cruise industry paid higher taxes than they are doing. Payment of higher taxes by the cruise industry would reinstate a stable economy in the Caribbean. It would ensure the profitability of related businesses and the collective economic boom in the region. The cruise industry should be aware of the existing threat in an imbalanced economic environment. Despite economic prosperity, the industry cannot exist in a vacuum for long. If the businesses that are related to the tourism industry in the Caribbean are not matched with the number of tourists, a long-term negative impact is likely to be realized. International intervention should be considered in this case so as to prevent undesirable effects and at the same time save the situation in the Caribbean. Policies that will regulate the payment of taxes will play essential roles in correcting economic crises in the Caribbean (Dwyer, Douglas & Zelco, 2004).
References
Barry, T., Beth, W., & Deb, P. (1984). The other side of paradise: Foreign control in the Caribbean. New York: Grove Press.
Braun, B., Xander, M., James, A., & Kenneth, R. (2002).The impact of the cruise Industry on region’s economy: A case study of Port Canaveral, Florida. Tourism Economics. 8(3), 281-288.
Dwyer, L., Douglas, N., & Zelco, L. (2004).The economic contribution of a cruise ship visit. Tourism in Marine Environments. 1(1), 5-16.
Robert, E. (2000). Caribbean cruise tourism: Globalization at sea Annals of Tourism Research. 27(2), 345–370.
Sheller, M. (2003). Consuming the Caribbean: From Arawaks to Zombies. New York. Routledge.
The Associated Press. (2003). Caribbean cruises leave wave of bitter merchants in ports.Massachusetts Live. Web.