Alaska Gov to reduce cruise taxes?

For the 2010 and 2011 summer cruise season, many of the cruise lines have pulled ships out of Alaska due to the high taxes implemented in the last couple of yours. Better news may be on the horizon...

"Alaska's Gov. Parnell Proposes Reduction in Cruise Head Tax
Published on: March 22, 2010

Alaska Gov. Sean Parnell proposed reducing the cruise passenger head tax from $46 to $34.50 -- a 25 percent decrease -- three days after meeting with top cruise line executives at a major industry convention in Miami Beach. As reported in Travel Pulse on March 16, Parnell met with ranking cruise executives for an hour while attending the Seatrade Cruise Shipping Miami convention. Parnell proposed the tax roll-back March 19 at a luncheon meeting of the Resource Development Corp. in Anchorage.

The meeting came after Holland America Line President and CEO Stein Kruse issued a stinging condemnation of Alaska’s taxes and regulations, saying, “The regulations in Alaska are more burdensome and more costly than anywhere else on earth.” Alaska this year is facing a 17 percent reduction in cruise business that Kruse said is a result of “punitive taxes” and “overzealous regulation.”

“Generally speaking, we’re enthusiastic that the governor is hearing our plea in trying to get costs down,” said Charlie Ball, president of Alaska tour operations for Holland America and Princess Cruises. “Absent all the details, it’s hard to make a very aggressive comment on it. But we had some good time with him this week, and he’s understood the issues for while. Conceptually we absolutely support him trying to fix the cost issues.”

In a statement, Parnell said he wants to bring more tourist dollars to Alaska with a comprehensive strategy to reduce taxes, increase tourism marketing and increase regulatory flexibility. In exchange, he said, the state will require more cruise ship deployments to Alaska. The governor’s proposal needs state legislators to move it forward, and the Legislature is currently in session in Juneau.

“We must make Alaska a more affordable destination to travelers from outside,” Parnell said. “I made it clear to cruise ship executives that we would need public assurances about increased deployments and economic activity in Alaska in exchange for these tax reductions.”

The head tax and other regulations -- which cruise executives say are so stringent the technology does not exist yet to comply with them -- came about after a 2006 initiative approved by voters. But as cruise lines reduced capacity in the 49th state, a grass-roots effort was launched by local businesses hurt by the decline in business. An organization called Alaska Alliance for Cruise Travel (Alaska ACT) was formed to fight what it calls inequitable taxation and regulation. Alaska ACT encouraged Parnell to attend the Seatrade Cruise convention, where he met with Carnival Corp. Chairman and CEO Micky Arison, Royal Caribbean Cruises Ltd. Chairman and CEO Richard Fain, Norwegian Cruise Line CEO Kevin Sheehan, Kruse and others.

Nine cruise lines last year formed the Alaska Cruise Association, which in September filed a lawsuit seeking to overturn the head tax.

Parnell also said he would seek offsets for local head taxes levied by certain cruise ports to eliminate the possibility of taxing tourists twice for the same Alaska destination. Additionally, the governor reiterated his support for corporate income tax credits to incentivize greater Alaska tourism marketing."