Despite worried remarks from yachting industry stakeholders, House of Assembly lawmakers passed a bill on Tuesday afternoon that will dramatically raise cruising permit fees for charter boats.
However, the fee raises themselves are not the main concern for the territory’s yachting professionals. Rather, they voiced issue with the murky implementation timeline for those fees, as well as the legislation’s proposed definition of a home-based vessel.
The most recent public draft of the act — which was passed with yet-to-be-publicised amendments — lists similar requirements for a home-based vessel to those already described in the 1992 Commercial Recreational Vessels Licensing Act.
But industry professionals maintain those stipulations —namely, that a home-based vessel be registered in the Virgin Islands – have gone largely unenforced, and they worry the updated cruising bill will change that.
Their concern is that including a similar definition in the 2017 bill might spur government to actually enforce the registration requirement – a bleak prospect for local charter fleets with high percentages of United States-flagged boats.
Should each of those vessels suddenly be considered a foreign-based boat, the same 1992 law would limit them to only seven charter pick-ups a year, a potentially dilapidating slash to their current workload.
It all begs a question: Why not just flag your vessel in the VI? In other words, stops more owners from signing up with the VI Shipping Registry?
The answer, professionals warn, is complicated.
Financing
When deciding where to flag a vessel, a boat owner might consider many factors, ranging from preferable tax schemes to confidentiality to regulatory requirements.
Various of reasons may lead the owner to choose not to register in this territory.
One is financing: many boats in the VI are American-owned, and American banks are hesitant to provide mortgage loans for vessels flagged here, according to Andrew Ball, a marine surveyor at Caribbean Marine Surveyors.
“It’s a secured loan in almost all cases,” Mr. Ball said. “So there are kind of two ways people will do it: They’ll either mortgage their house and get the cash and use what they’ve already paid off on their house as the security, or they’ll use the boat itself as security.”
When it comes to the second option, Mr. Ball explained, where a vessel is flagged can make all the difference.
“For the boat to be used it has got to be in a legal place where the bank can come back and repossess your boat if you don’t pay your loan, otherwise it’s not really secure,” he said. “If you put the boat under – for instance – a BVI flag, then technically it’s in the BVI’s legal jurisdiction.”
Captain Raman Bala, acting director of the VI Shipping Registry, pointed to the 3,500 pleasure yachts and 500 commercial yachts already flagged here as an argument against Mr. Ball’s assertion.
“It’s not something that is not possible,” he said.
Additionally, to make boat financing easier, government is working on legislation that would allow for vessels to dual register in the VI and another country, Mr. Bala explained.
However, Mr. Ball does not see that as a realistic solution.
“I don’t think it’s feasible at all,” he said. “How can you have an asset that is under the control of two jurisdictions? What happens when one jurisdiction disagrees with the other?”
Dick Schoonover, manager of CharterPort BVI, agreed with him.
“Whose laws apply?” he asked.
If that law does not work, the VISR will work with government and the yachting sector on something else, Mr. Bala explained.
“We want to work together to find practical solutions,” he said, adding, “We are here to help anyone who is needing any kind of assistance with registering vessels.”
Convenience
The industry works with boat owners who often flag their boats with the US due to the relative ease of the US’s registration process, according to Peter Twist, director of the BVI Marine Association.
It can be inconvenient and more expensive for owners to flag their vessels in the territory, because American citizens need to incorporate a company in the VI before registering their boats, he explained.
Mr. Twist warned that requiring all American owners to do that in order to have a “home-based charter boat” in the territory could harm the industry.
“The last thing we want to do is start worrying about the vessels going to the USVI,” he said.
However, government is also working on a bill that would allow American citizens to register with VISR, Mr. Bala said, adding that he expected it to be passed within the next couple of months.
Bill details
Currently, cruising permit fees are mandated by the 1976 Cruising Permit Ordinance. The law charges $0.75 per person per day on VI-based charter boats from May through November; $2 per person per day for VI-based vessels from December through April; and $4 per person per day for foreign boats year-round.
According to the most recent public draft of the bill, the 2017 Cruising Permit Amendment Act would increase each of those fees by at least twofold.
The bill sets December through April prices at $6 per person per day for home-based charter boats and $16 per person per day for foreign vessels.
It sets May through November prices at $2.25 per person per day for home-based boats and $8 per person per day for foreign-based charters.
Implementation
Yachting professionals who spoke with this reporter all made a point to emphasise that they were not against fee increases in principle.
“The cruising taxes as we know them today are antiquated. They’re vaguely 30 years old,” said Mr. Schoonover.
Most, however, suggested the hikes be phased in incrementally over multiple years.
Such a process — coupled with more public relations informing people of the changes — would give the industry a chance to better digest the changes, explained Chris Juredin, founder of Commercial Dive Services.
Others noted that they wanted a better product for their money.
“If there is going to be an increase in fees, I would expect the services provided to be in line with the fee structure,” Mr. Ball said. “Are we going to have an actual dinghy dock at the Road Town ferry terminal, rather than climbing up a five-foot wall? Are we going to have online check-in like you do at other islands to go through Customs and Immigration?”
HOA debate
Lawmakers debated the bill last week but focussed largely on what they perceived as pushback from the industry on the fees themselves and did not discuss the issues surrounding home-based vessels.
“Everyone seems to have this interest to want the government to provide facilities, docks, Immigration, Customs clearance,” Health and Social Development Minister Ronnie Skelton (R-at-large) said. “They want the government to keep their water clean. They want the anchor buoys in the water. They want all of these things to happen, but no one wants to pay for these things.”
Dr. Hubert O’Neal (R-D9) compared the proposed system favourably to the scheme in the Bahamas, which charges an entry fee of $150 for boats up to 35 feet and $300 for boats longer than 35 feet.
However, Tim Schaaf, a member of the Charter Yacht Society, argued that the legislator’s analogy was misleading.
Those fees grant a cruising permit for the year in the Bahamas and cover unlimited entries for up to four people, he explained, making the VI look more expensive by comparison.
Additionally, the Bahamian fee covers the boat’s fishing permit and departure tax for up to three passengers.
For Mr. Schoonover, the House debate served as another frustrating example of the disconnect between government officials and the yachting industry.
“There is no unified government policy towards yachting,” he said. “It’s every department, every agency for themselves: ‘Go out and raise money however you think you can, and let’s just figure out how to nickel and dime people to death.’”
This article originally appeared in the June 8, 2017 edition.
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