The cruise ship industry, where outbreaks of covid-19 in Japan and California started, are (justifiably) hurting right now. Nobody is traveling, people are social distancing and that’s resulted in canceled trips and empty ships. But they’re not getting a cent of the economic stimulus package because their grand scheme of offshore headquartering has seemingly backfired. Oh, well.
The House of Representatives approved the $2 trillion package earlier today after it passed through the Senate Wednesday night. Donald Trump signed it into law this afternoon. It is currently the biggest emergency aid package in United States history, reports CNN.
It includes $500 billion in loans and loan guarantees for industries that have been affected by the pandemic. Unfortunately for cruise ship companies, however, the companies must be “created or organized in the United States or under the laws of the United States” and “have significant operations in and a majority of its employees based in the United States” in order to be eligible, reports The Hill.
See, the big cruise line companies don’t actually have their primary headquarters here in the U.S. Royal Caribbean is based in Liberia, Norwegian Cruise Lines is based in Bermuda, and Carnival Corporation, which owns the Princess cruise lines (and has had a number of covid-19 outbreaks aboard its ships) is based in Panama.
And it really doesn’t seem like picking these locations has anything to do with liking the weather there, according to The Washington Post:
Major cruise companies have located their primary headquarters overseas, which for years has allowed them to pay almost no federal taxes and avoid some U.S. regulations. To staff their ships, the companies rely heavily on foreign workers from the Philippines, Indonesia and India.
These companies have been more or less operating under a flag of convenience. But now that the covid-19 shit has hit the fan and made things significantly less convenient, the cruise companies suddenly want federal benefits. Cruise industry executives, The Washington Post went on to report, lobbied for allowances for ships to keep traveling in and out of the U.S. during the early days of the virus’s spread in the country.
And though Carnival CEO Arnold Donald (yes, that’s his real name, and he makes 11 million bucks every year, thankyouverymuch) said the company isn’t looking for bailout cash specifically, “[getting] a loan guarantee would be helpful.”
For what, exactly? Not paying federal income taxes? Hellish working conditions for employees? Horrific pollution? Giant luxury cruise ships emit 10 times more air pollution than all of the cars in Europe, according to a study conducted by Transport & Environment.
A 2019 story from the Financial Times elaborates:
A study of 203 cruise ships at sail in Europe in 2017, carried out by the European think-tank Transport & Environment, found that of the 20 most polluting cruise ship lines, seven were operated by Carnival-owned brands. In total cruise lines emitted more than 60 kilotonnes of sulphur dioxide, a cause of acid rain and lung cancer.
The report comes just days after Carnival agreed to pay a $20m fine and undertake increased monitoring after it was found to still be dumping sewage and plastic waste, leaking gas and dirty water and falsifying records of incidents.
In 2016 the company pleaded guilty to dumping oily waste from its Princess Line ships, and was fined $40m and put on a five-year probation but on Monday it admitted to violating that probation in a Miami court.
Trump said on Sunday that “we can’t let the cruise lines go out of business.” And they probably won’t. Though they aren’t technically headquartered here, cruise line companies do have Florida-based subsidiaries, The New Yorker points out:
Another potentially alarming possibility is that big companies that are registered overseas for tax reasons, such as cruise lines, could apply for a bailout for their U.S. subsidiaries. A draft of the bill that Seth Hanlon, a tax specialist at the Center for American Progress, posted online, said a company can only get assistance if it was “created or organized” in the United States and has “significant operations in and a majority of its employees based in the United States.” As an example, that seems to rule out giving any assistance to Carnival Corporation, the parent company of Carnival Cruise Line, which has escaped U.S. taxes by incorporating in Panama. But what about Carnival Cruises Line, itself, which is a U.S. subsidiary based in Miami? Some tax experts say there is a loophole that companies like it could exploit.
I’d advise these cruise companies to check in with the governments of Panama, Liberia, and Bermuda and see what kind of financial aid they can get there.