Cruise Tax Lawsuit Dropped

By Ed Schoenfeld

The cruise industry has ended its lawsuit against Alaska’s passenger head tax. 

Lines promised to drop the suit if the Legislature passed a bill reducing the tax and changing its structure. Governor Sean Parnell signed that bill last week (June 24). The suit was dismissed with prejudice, which means the lines will not sue again over the issue.

Voters imposed the $46-per-person tax by passing the 2006 Cruise Ship Initiative.

Legislation passed in April removed a regional impact fund, which directed some tax proceeds to communities hundreds of miles from cruise-ship docks. The industry pointed to federal legislation requiring cruise taxes be used closer to ports.

The bill also reduces the fee by the amount collected by Ketchikan and Juneau, which charge their own head taxes. Most ships sailing Alaska waters stop at both communities.

As a result, most passengers will see their tax drop about 60 percent, to $19.50. The reduction will be in effect for the 2011 tourist season.

The bill made no change to a $4 passenger fee that funds an onboard environmental monitoring program.

Supporters and cruise lines say the change will bring more ships and passengers to Alaska. Critics say ship numbers, which are shrinking, are affected more by the world economy than state taxes.


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