Parnell Signs Bill Reducing Cruise Passenger Tax

By  Ed Schoenfeld

Governor Sean Parnell signed a bill today lowering Alaska’s cruise ship passenger head tax.   He inked the legislation in Juneau’s tourism district while surrounded by cruise officials, gift-shop owners and excursion operators.
The bill lowers the $46-per-person tax to $19.50 for most passengers. It will be in effect for next year’s cruise season.
Parnell said he introduced the legislation in hopes of getting cruise lines to sail more ships to Alaska.

Through this legislative session it became very clear as I talked to small business owners around the state that what they needed was for state government to step out of the way and create more opportunity.

Several ships left state waters this season, reducing passenger capacity about 15 percent.  Alaska Cruise Association President John Binkley said lines pulled ships because costs were too high.

This really gives Alaskans, thousands of Alaskans, hope that we have turned the corner now and we will no longer have the exodus of ships and capacity out of our state and that we will start to build the business back and get those Alaska jobs back for Alaskans.

Tax supporters say the worldwide recession, not the fees, caused cruise lines to redeploy ships. Chip Thoma represents Responsible Cruising in Alaska.

I think this law was decided more on an emotional basis than an actual policy need. But once the emotions kicked in and people saw the recession was impacting their business they grasped out for anything they could to make a difference and this is what they settled on.

The passenger fee was approved by voters in 2006 as part of the Cruise Ship Initiative. That measure contained other tax and pollution-control measures, including a separate $4-per-person fee that funds an onboard environmental monitoring program.
The bill reduces the $46 tax to $34.50 for all passengers on large cruise ships. Another $15 will be cut for those stopping in Ketchikan and Juneau, which levy their own fees. Almost all ships stop at both ports, lowering the total to $19.50.

Thoma said that takes about $25 million a year away from docks and other work supporting the industry and addressing tourism impacts.

There’s enough money remaining for all the ports to get their local projects done. We’re just taking a hit in terms of overall money available for big projects.

Alaska has seen about 1 million cruise ship passengers for several years. That number dropped to about 850,000 this season, and will be closer to 875,000 in the next one.
Shelly Wright, of the regional business and government group Southeast Conference, said shops and tours have felt the change.

I think the expectation of a lower rate of return this year is happening. I think the attitude has gotten better this year. It feels better and people are happier,” she said. “I think there are fewer passengers but the passengers who are coming are spending money locally. And it’s probably not as bad as they thought it was going to be.

Cruise lines filed a lawsuit last year seeking to end the tax. Parnell cited it when he announced the legislation.
The cruise association’s Binkley says that suit will be withdrawn soon. And he says additional sailings could be announced in the fall.
Small cruise ships and state ferries are exempt from the head tax.


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