service charge

[navybankerteacher]

Err, no. That's not logical. Relying on a service charge to pay wages doesn't affect their profit reports.

....

 

JB :)

 

You may be correct with regard to UK taxes, but there are jurisdictions which tax corporations on the basis of gross revenues, rather than net income. I am not an expert on worldwide taxation, but the State of Washington, among probably many other taxing jurisdictions (where Holland America is based), for example, is such a jurisdiction. Accordingly, if they are able to have a large part of their employee costs NOT viewed as part of their gross revenue, the service charge treatment would indeed affect their profit reports as applicable to paying taxes - and would result in lower taxes paid by them, while giving their staff the same income.

[luddite]

hi

i have booked a cruise on the strength of info given me by a "cruise consultant ". the info was that the considerable amount re service charges could be opted out of if one preferred.however now the booking has been made they are saying it has to be paid on settlement of onboard account and can only come as a refund made after i have returned home,i am not happy with that as i had been led to believe this deduction would be done on settlement of my onboard account. anybody advise me what to do.

cheers:)

 

welldarnyoushouldgoahead andpayyourbillsbut that is justanopinion

cheers:)

[John Bull]

You may be correct with regard to UK taxes, but there are jurisdictions which tax corporations on the basis of gross revenues, rather than net income. I am not an expert on worldwide taxation, but the State of Washington, among probably many other taxing jurisdictions (where Holland America is based), for example, is such a jurisdiction. Accordingly, if they are able to have a large part of their employee costs NOT viewed as part of their gross revenue, the service charge treatment would indeed affect their profit reports as applicable to paying taxes - and would result in lower taxes paid by them, while giving their staff the same income.

 

Hi NBT,

 

No, until a few weeks ago I'd never heard of tax based on turnover (gross revenue) rather than profit. And I'd have said it was unworkable - my own wholesale business relied on high turnover / low margins, and should not be taxed more highly than businesses in retail & other sectors that achieve the same profit through low turnover but high margins.

 

But there's been much criticism in recent weeks about the derisory level of UK tax (around 1%, compared to the standard 20% !!!) paid by some international corporations - Google, Amazon & Starbucks in particular - because of their juggling costs between countries to switch their declared profits to low-tax countries.

And the outcome is proposals for UK tax to be applied to UK turnover of those corporations rather than their declared UK profit, to close that tax loophole. Since this will be organised by the UK's Parliament and tax bureaucrats I'm confident that this will be in operation before the end of this century.

 

So yes, thanks for the heads-up.

I now understand taxation on turnover rather than profits. :)

And the reason behind it.

And the wages dodge by cruise lines to avoid paying their dues. ;)

 

JB :)

Edited February 8, 2016 by John Bull

[navybankerteacher]

In a perfect world, every individual and every corporation would pay "their dues", as JB appropriately put it. Unfortunately, this is not a perfect world - tax legislation being written by imperfect humans. Recognizing this, cruise lines, who have to live in a world full of complicated tax laws, have an obligation to their employees as well as their stockholders to conduct business in such fashion as will put the greatest return in said employees' and stockholders' pockets.

 

Do not blame the cruise lines for acting as responsibly as they can in a world not of their own making.

 

The concept of performance-related compensation is a wholly different matter - which also has a place in discussions of service charges.

[Schoifmom]

It's interesting that so may people have fallen for this post, being sucked into a dramatic conversation by someone who chose this controversial topic for their VERY FIRST POST and this is their ONLY ACTIVITY on the boards. I smell a troll, can't you?

[John Bull]

In a perfect world, every individual and every corporation would pay "their dues", as JB appropriately put it. Unfortunately, this is not a perfect world - tax legislation being written by imperfect humans. Recognizing this, cruise lines, who have to live in a world full of complicated tax laws, have an obligation to their employees as well as their stockholders to conduct business in such fashion as will put the greatest return in said employees' and stockholders' pockets.

 

Do not blame the cruise lines for acting as responsibly as they can in a world not of their own making.

 

The concept of performance-related compensation is a wholly different matter - which also has a place in discussions of service charges.

 

Yes, tax dodges put a greater return into stock-holders' pockets.

 

But perhaps not into employees' pockets. ;)

Cruise lines don't have the greatest reputation for what they pay their crew, or for having a daily charge which reduces crew income when bookings are low / cruises are cancelled, and allows tightwad cruisers to stiff them by opting-out. :(

 

Performance-related compensation loses its edge when crew have to share that income.

 

Rolling the charge into proper wages covered by appropriate fares would be much more equable and transparent. And folk would be more willing to put their hands into their pockets for good service, rather than volunteer to effectively tip twice.

But advertising an artificially-low ticket price is too big a god for most cruise lines so that just ain't gonna happen.

Besides, if they did away with the nonsense we'd all lose one of our favourite topics on Cruise Critic. :D

 

Regards as always ;)

 

JB :)

[lynneprice]

We were given the same advice and information when we booked

[navybankerteacher]

Yes, tax dodges put a greater return into stock-holders' pockets.

 

...

 

Performance-related compensation loses its edge when crew have to share that income.

 

...

 

JB :)

 

Two comments:

 

A) corporate management has what amounts to a fiduciary obligation to maximize return for stockholders: they would be derelict in their performance if they did not apply whatever LEGAL means exist to maximize that return. When an individual taxpayer properly utilizes provisions of the tax code to minimize his taxes, would you accuse him of playing a "tax dodge", or merely being intelligent in preparing his return?

 

B) most posters on these threads do say that they believe in rewarding extraordinary service - either by not removing optional service charges or giving additional tips to recognize great service. Even many of those who rail against service charges say they would prefer to give individual tips personally - so they do believe in the concept of performance-linked compensation. Very few of us, with other options, would want to work for tips -- but when it comes to personal service tipping does indeed encourage "going the extra mile" in providing personal service - the receipt of which is, in fact, part of what many cruise line customers find attractive.