BILL PROPOSED TO STIMULATE U.S. CRUISE SHIP CONSTRUCTION

   Rep. Duncan Hunter, R-Calif., has introduced a tax reform bill aimed at stimulating the U.S. shipbuilding and cruise ship industries.
   The All American Cruise Act of 1999 would provide tax incentives to
U.S.-owned cruise ship operators and shipbuilding companies.
   U.S. shipyards would not have to pay taxes during vessel construction or overhaul. The yards would be required to pay taxes only after a ship is delivered to an operator.
   The bill would:
   * Eliminate U.S. corporate income taxes for U.S. cruise ship operations, making them more competitive with foreign cruise ship operators who are exempt from U.S. corporate income taxes. Supporters of the bill said that Carnival Cruise Lines reportedly received $652 million in tax-free income last year as a controlled foreign corporation.
   * Give U.S. shipyards a tax credit equal to the amount estimated to be earned from the construction of a cruise ship in a given tax year. To be eligible for this credit, a shipbuilder must show average gross earnings of at least $30 million for three taxable years.
   * Reduce operators’ current 10-year depreciation schedule to five years.
   * Repeal the $2,500 business tax deduction limit for a convention on a cruise ship.
   * Provide a 20-percent tax credit for fuel operating cots associated
with environmentally clean engines manufactured in the U.S.
   Supporters of the bill include the American Shipbuilding Association,
the American Maritime Officers Union, the International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, and the American Maritime Officers Service Union.
   The House Ways & Means Committee is expected to hold hearings on the bill next year.