Cruise ship levy: consultation

4. Basis of the charge

The intention behind any cruise ship levy would be to have the levy apply to those ships that are carrying paying passengers, on a journey involving two or more nights on the ship, and which give the passengers the option to disembark from the vessel onto the Scottish mainland or a Scottish island. It is not intended that a cruise ship levy would apply to ferry services in Scotland, or to those visiting Scottish waters in private boats or yachts and which are not carrying paying passengers. As mentioned above, it would be for a local authority to decide whether or not to introduce any cruise ship levy in its area.

In considering the potential options for the basis of any cruise ship levy it is important to note the fact that, legally, the boundary of a local authority ends beyond the foreshore (with only three exceptions of which we are aware^[3]). It would therefore usually not be possible to apply a levy directly to an activity that takes place beyond the foreshore, e.g. to a cruise ship dropping anchor off the coast of a local authority. The Scottish Government has taken that into account when putting forward the possible options below.

There are a number of possible activities that could form the basis of a cruise ship levy in Scotland. Four of these are set out and discussed in turn below, and we would welcome views on the advantages and disadvantages of each. They are:

• basing the level of levy paid on the gross tonnage of a vessel;
• basing the level of levy to be paid on the total passenger capacity of a vessel;
• basing the level of levy to be paid on the total number of passengers on board a vessel when it moors at a port;
• basing the level of levy to be paid on the number of passengers that disembark at a port.

4.1 Gross Tonnage of Vessel

One approach to a cruise ship levy would be to use the gross tonnage (GT) of the vessel as the basis for calculating a levy. All vessels that operate in UK waters must declare their gross tonnage. Ships over 24 metres in length are issued with international tonnage certificates by a certifying authority, and all ships operating in UK waters are required to hold an international tonnage certificate (Merchant Shipping (Tonnage) Regulations 1997; United Nations, 1969).

The levy could be based on a cost per GT, could be a flat fee that applied to all cruise ships, or could be a varying levy based on bands linked to the gross tonnage of a ship. In this approach the event that triggered the levy would be the ship mooring at the relevant port (one at which a local authority had decided to apply a cruise ship levy), and with the option for passengers to disembark from the ship. Such an approach would have the advantage of being clear, and potentially reflect the size of a cruise ship, and therefore the number of passengers it would be likely to disembark.

Available research suggests that this approach is currently being practiced in a limited number of jurisdictions and under specific circumstances. As of 2016, Greenland moved from a per passenger tax of 525 DKK (Danish Krone) to charging 1.1 DKK per gross tonnage of vessels (which means a 4,200 ton vessel pays around £4,730 DKK which is approximately £530) (Bogason et al., 2021). This fee is charged at each port of call within the jurisdiction. Greece has also applied a cruising tax based on vessel size on all private and commercial leisure crafts since 2014. However, it should be noted that the Greek Government has also recently announced changes to its practice where cruise ships are concerned, and will now be applying a per passenger fee of 20 euros to all cruise ship visitors stopping at the islands of Santorini and Mykonos, and a 5 euro fee at all other islands and destinations within the country (Reuters, 2024).

4.2 Passenger capacity

Another possible approach to a cruise ship levy would be to use a ship’s total passenger capacity as the basis for calculating a levy. In this approach the levy could be set at a figure per passenger (in terms of capacity), or could be set in broad capacity bands. This approach would need to require cruise ship operators to declare the passenger capacity of the relevant ship. It is also worth noting that the passenger capacity of a ship can change over time, as space on board on a vessel can be reconfigured.

In this approach the event that triggered the levy would be the ship mooring at the port at which a local authority has decided to apply a cruise ship levy, and with the option for passengers to disembark from the ship.

Available evidence from international examples suggests that this is the most common approach, used in locations including Dubrovnik. However, there is significant variation in how fees are applied. For example, in Dubrovnik, a lump sum fee is applied based on the passenger capacity within set ranges (e.g. a ship with a capacity between 1001-2000 passengers would be charged a lump sum fee of approximately 2700 euro) (Republic of Croatia: Ministry of Tourism and Sport, 2019). Further examples and details on these cases are available in Annex A of this paper, and the partial BRIA published alongside this consultation paper.

4.3 Number of passengers on board

Another approach to a cruise ship levy would be to base it on the total number of passengers on board a vessel when it moors at a port. This is an approach taken in a number of parts of the world, such as Amsterdam where cruise ships must register with the Passenger Terminal Authority and provide a manifest of passengers. This manifest has to distinguish between those who are continuing with the cruise from Amsterdam, known as transit passengers, and those starting or completing their cruise in the city, known as turnaround passengers. The cruise ship tax is then calculated based on the total number of transit passengers.

Advantages of this approach are that passengers would not need to be counted as they disembarked, reducing the potential administrative burden, and the level of cruise ship levy to be paid could be calculated as soon as a ship moored in a port. A levy could potentially be based on a per passenger basis, or in bands depending on the number of passengers.

4.4 Disembarking passengers

A fourth possible approach to a cruise ship levy would be to use the number of passengers disembarking from a ship as the basis for calculating a levy. This would have the advantage of aligning the level of cruise ship levy paid with the number of passengers physically being in the area. Disadvantages of this approach would be that the level of cruise ship levy to be paid could not be calculated in advance, and it would be likely that passengers would need to be counted on and off the ship, with any exemptions (see below) applied. A range of approaches could be taken to who would pay or collect the levy in this scenario. It could be that the cruise ship operator counted the number of passengers to leave the ship (or use tendering boats), and then paid the appropriate level of cruise ship levy; alternatively the local authority, port operator, or another body could count the number of passengers and then bill the cruise ship operator.

In this approach the event that triggered the levy would be:

(a) passengers setting foot on land in the area where a cruise ship levy applied, whether that be from leaving a cruise ship via a gangway; or

(b) where a cruise ship is at anchor off the coast, stepping off a boat tendering passengers to and from a cruise ship.

This approach is similar to that adopted in Venice, where a “Day Visit” fee is applied to all tourists visiting the city centre who are not booked into accommodation in the city. (The “Day Visit” fee is not technically a cruise ship levy as it is applied not only to those visitors arriving by cruise ship, but also those who arrive by car, train, or other means of transport.) In this case, cruise ship passengers wishing to visit the city are required to either pay the fee individually online in advance or remit the fee via their carrier, whether that be a cruise line or other means of transport. The details of this case can be found in Annex A, and in the partial BRIA being published alongside this paper.

Question 3: What should the primary basis of a Cruise Ship Levy charge be, if introduced in Scotland?

Select one

• Tonnage of a ship
• Passenger capacity of a ship
• Number of passengers on board a ship
• Number of passengers to disembark from a ship
• Other (please specify)
• Don’t know

Please provide the reasons for your answer.

4.5 Environmental Aspects

The environmental performance and impact of cruise ships has been an area of increasing focus over recent years. In the past it has therefore been suggested that a potential cruise ship levy in Scotland should have some element linked to the environmental impact of cruise ships. This could be some increase in the level of levy paid if a ship had poor environmental credentials, or a reduction if it has positive ones (such as being equipped to use shore power, where it was available). We would be interested in views on this aspect, and on how best any environmental element of a cruise ship levy could be calculated.

In cases such as Barcelona, concerns around the environmental impact of cruise ships were one reason for the introduction (or increase) of cruise ship levies. In Barcelona’s case some funds from the levy are used to mitigate the industry’s environmental impacts. Furthermore, cruise ship operators docking in Barcelona can apply for a rebate to taxes applied to the vessels (not the passenger levy) based on meeting certain environmental requirements. Ships using liquefied natural gas (LNG) for propulsion are eligible for a 10% rebate, while those ships using it for hotelling systems are eligible for 30%. Newer ships and those able to demonstrate certificates for good environmental management are also eligible for further rebates of 12% and 5% respectively. The maximum possible rebate on all taxes is 40%.

However, much of the international evidence available suggests that in jurisdictions where cruise ship levies have been applied, environmental impacts and fees are handled separately. For example, in Norway an Environmental Port Index was implemented to differentiate pricing for cruise ship based on how ‘clean’ the ships are (Sandven, Jørgensen, and Wassler, 2024). These economic incentives are only applied to mooring and berthing fees, rather than to the cruise ship levy.

Alternatively, some jurisdictions apply an additional fee to passengers that is distinct from but charged at the same time as the levy. For example, in addition to their cruise ship levy, the Bahamas also charge a $5 US dollar “tourism sustainability levy” to all passengers arriving or leaving the islands by cruise ship (The Parliament of the Bahamas, 2023). Similarly, in 2025 Iceland will be introducing an “infrastructure fee” of 2500 Icelandic Króna (approximately £15) that will be applied to each passenger on any docking cruise ships. This will be in addition to its cruise ship levy (Cruise Iceland, 2024).

Question 4: In addition to the main basis of the charge, should any cruise ship levy also take into account the environmental impact of a cruise ship?

• Yes
• No
• Don’t Know