Cruise Ship Levy: consultation analysis

4. Calculation and collection

Chapter 4 considers views on who should calculate, assess and collect any cruise ship levy. The consultation paper provided options for consideration, such as whether the cruise ship levy would be a self-assessed tax, i.e. the cruise ship operator could be responsible for calculating the level of levy to be paid, or it could be calculated by an outside organisation, such as Revenue Scotland, and billed to the organisation liable for the levy. The local authority could also be responsible for calculating and collecting the levy.

Q5. Who should collect any cruise ship levy? Select one. Please provide the reasons for your answer.

Local authorities were seen as the most appropriate body to collect any cruise ship levy by all those answering (35%) and by both individuals (34%) and organisations (36%). While one quarter (24%) of those answering felt the port operator should be responsible, this was more heavily favoured by individuals than organisations (29% and 14% respectively). The ‘don’t know’ option was more likely to be selected by organisations than individuals (35% compared to 12% respectively). Across different types of organisations, the strongest support was recorded by cruise industry respondents for local authorities to collect any levy (69%), with little support from any organisations for cruise ship operators to collect any levy.

Just under three quarters of respondents commented on Q5. The analysis below presents the themes that were evident for each closed-question answer option, structured from highest to lowest preference for each option at the closed question. Each subsection presents positive and negative perspectives described for each approach.

Local Authority

Reasons for local authority collection

Many respondents detailed a range of reasons in favour of local authorities calculating and collecting any cruise ship levy, although only one local authority supported local authority collection. The most common theme, mentioned by several respondents, was that it comes under the remit of the local authorities' responsibilities. These respondents felt that if local authorities wish to introduce the levy and are the recipients of its proceeds, they should also be responsible for its collection and any related costs.

“[Local Authorities] would be the beneficiaries of the levy, so they should have the burden of the costs of collection and not force it onto other companies. This would also enable an accurate assessment of the cost-benefit ratio.” - Individual

Several respondents shared broader views in support of local authorities collecting a cruise ship levy, including, from most to least prevalent:

• It aligns with the revenue raised going to the local authority to spend as they see fit.
• Local authorities are best positioned to administer the collection.
• It is the simplest and most cost-effective option.
• It will ensure accountability and transparency.
• It aligns with other levies, such as the visitor levy.

Reasons against local authority collection

In contrast, some respondents detailed challenges with local authorities calculating and collecting a cruise ship levy. Respondents felt this could increase the operational burden and costs that local authorities already face, and a few raised perceived practical and administrative challenges. One individual raised concerns that the revenue collected by a local authority would not be ringfenced for related improvements.

“They would need to have someone sitting there to charge each person as they land.” – Individual

Port Operator

Reasons for port operator collection

Many respondents commented that port operators are the most appropriate party to calculate and collect a cruise ship levy. Several respondents felt they were best positioned to handle the collection due to their direct involvement with cruise ships and their operational capacity, noting that it would be efficient and cost-effective as they already have the necessary infrastructure and workforce. For example, a few respondents flagged that port operators already calculate and collect other fees, such as mooring fees and harbour dues, and already have a presence in ports where cruise ships dock. Others noted that port operators would be best placed to gather accurate figures around those disembarking and calculate the correct levy owed.

“Port operators will already collect bookings from cruise ships which plan to dock at each port, which will include ship tonnage details. Port operators will collect payment from cruise ship operators after they have docked. Relationships have already been built up between local authorities, port operators and cruise ship operators. Cruise operators are unlikely to miss payment as they will likely want to dock again in the near future.” - The City of Edinburgh Council

“A bar has to collect the beer duty from its customers, and a garage has to collect petrol duties, therefore, the port authority should be collecting the duty from their customers.” - Individual

Some respondents commented in support of the levy being collected by port operators but did not provide further details about their rationale.

Reasons against port operator collection

Several respondents raised concerns about port operators being responsible for calculating and collecting a cruise ship levy. Some felt that there would be an unreasonable administrative burden if port operators were to take on this role, with respondents highlighting that port operators do not have systems in place to calculate and collect a levy and that it would be costly to set up such a system.

“Port operators would not be the appropriate entities to administer the levy. They do not sell tickets, handle bookings, or process payments. As such, ports have no mechanism to charge passengers directly. Any attempt to do so would require a complex intermediary structure between ports, cruise operators, and local authorities.” - British Ports Association

Cruise Britain noted that ports around Scotland have different ownership models, i.e. some are privately owned, some are community owned, and some are public, which could complicate any singular approach to administration. Port of Inverness highlighted doubt around the legality of Trust Ports charging ships on behalf of third parties, such as local authorities. Given issues such as this, a few respondents raised concerns that, without clear procedures, any levy could potentially strain commercial relationships within the industry.

“If ports or cruise lines are forced to assume responsibility, it could strain commercial relationships, cause confusion over liability, and increase costs throughout the supply chain.” - UKinbound

Other less mentioned views against port operators being responsible for the calculation and collection of a cruise ship levy included, from most to least prevalent:

• Port operators are not willing to take on this role.
• Port operators do not have the capacity to handle any queries or disputes regarding levy collection.

“Under harbours legislation there is no legal method that would enable a statutory harbour authority to collect such a levy on behalf of another authority. Moreover, in the case of private or trust ports, there are serious questions about whether they have the governance frameworks to collect and remit levies on behalf of a local authority. Doing so may require legislative changes, put Scottish ports at a disadvantage against ports outside Scotland as well as creating a host of compliance issues. - Orkney Harbours

Cruise Ship Operator

Reasons for cruise ship operator collection

Some respondents supported cruise ship operators self-assessing and collecting the levy. It was felt that cruise ship operators would be most appropriately placed to assess or calculate such a levy. For example, respondents expressed the view that cruise ship operators know how many passengers are on board their ships and how many are disembarking at each destination.

A few respondents felt this approach would be the easiest for passengers to understand. For example, the cost could be added to ticket prices and paid upfront, rather than risking difficulties with assessing and collecting payments at a later stage.

“Along with other worldwide ports, guests can include this at the time of payment or with the onboard account. If you wait for guests to do when during the trip, it can create bottlenecks and a negative experience.” - Individual

Reasons against cruise ship operator collection

Some respondents opposed cruise ship operators being responsible for self-assessing and collecting a cruise ship levy. Themes raised by these respondents, in order of prevalence, included a:

• Potentially high administrative burden on operators, as calculating the levy per individual was considered complex and costly.
• Lack of consistency if operators collect the levy in different ways, or if there is unclear guidance on how it is collected.
• Risk of inaccurate reporting, as it was suggested that cruise ship operators might misreport passenger numbers.

Other considerations and suggestions

Some respondents noted other considerations and suggestions, including, from most to least prevalent:

• A small number mentioned the need for collaboration between the cruise industry, port operators, and local authorities.
• The importance of flexibility, to, for example, account for last-minute itinerary changes, was highlighted by a few respondents.
• One respondent suggested having a national approach, with the levy collected by the Scottish Government.
• One irespondent suggested using Artificial Intelligence technologies to collect the fee as a way of cutting costs and improving efficiency.

In addition to the overarching themes of opposition to a levy and requests for more information, some respondents at Q5 shared views on how the revenue raised by any levy should be spent. The analysis of responses to Q10 explores this in greater detail.