Governor proposes cruise ship passenger tax reduction

After attending the biggest trade show of the cruise ship industry in Miami, Governor Sean Parnell last week made a pitch for a reduction of the cruise ship passenger’s head tax. He proposed lowering the tax by $12.In August 2006, Alaska voters approved an initiative that imposed the head tax to provide money for infrastructure of port towns and communities impacted by cruise ship tourism. The state began taxing passengers of cruise ships with more than 250 berths in 2007.  Major cruise ship lines operating in Alaska are reporting reduced capacity in the state for 2010.  They cite soaring taxes, fees and regulations as problems.

Of the $46 dollar tax — paid by the passenger  —  $5 go to the first five ports of call. Twenty-five percent of the tax is designated to go to local governments impacted by the cruise ship industry. That’s exactly the 25 percent Parnell wants to cut, because of a lawsuit filed in federal court. The court case, brought on by the cruise industry, says that the 25 percent going to port town communities is federally unconstitutional.  Parnell wants the cruise ship executives to drop the lawsuit and has offered the head tax reduction. However, the tax change has to be approved by the legislature.  Parnell introduced his own bill on Thursday, which also includes corporate income tax credits to offer an incentive to market Alaska tourism.

In the 2009 cruise ship season, the state collected over $46 million in passenger taxes. Even though cruise ship tourists participating in land tours come to Talkeetna and impact the town, none of those tax dollars ended up here.

However, Palmer got $100,000 for restrooms at their visitors information center and Wasilla received $430,000 for train station improvements.

According to Jody Simpson at  Senator Charlie Huggins office, this could change if area community councils would nominate capital projects by contacting valley legislators or by going through the Mat-Su borough’s capital improvements nomination process. This year’s budget is closed already, but she said, Senator Huggins would work with the community to develop a project for consideration in next year’s budget.