$50 more to cruise 49th state

IT may cost you more to cruise to Alaska next year, starting with a new $50 tax per passenger that Alaska voters approved last month.

The new $50 head tax is on top of the $40 to $70 a person that Alaska cruise passengers already pay.

Fares to Alaska, a higher-ticket cruise destination anyway, also may increase as a result of other cruise-line taxes imposed by a measure on the Aug. 22 primary ballot, cruise executives said.

The voter-approved citizen initiative also hits the cruise industry with a laundry list of new levies and regulations. The measure, which passed with 52% of the vote, affects cruise lines with ships carrying more than 250 passengers.

The $50 head tax includes $4 to establish a corps of ocean rangers stationed on each ship to monitor pollution controls. The remaining $46 is intended for improvement of ports, harbors and visitor services. With about 950,000 passengers cruising to Alaska each season, the head tax will bring about $47.5 million into state coffers.

But for cruise lines, the big hit comes with the levy of a corporate income tax and a 33% tax on gambling revenues in their ship casinos while in Alaskan waters. Additional environmental reports and permits also are required.

“We’re obviously disappointed in the vote. I think the measures are punitive,” said John Shively, vice president of government and community relations for Holland America Line, which has eight ships in Alaska seasonally, the most of any line. He foresees a potential increase in cruise fares because of the new taxes and “the bureaucratic hoops we have to jump through on the environmental side, even though there’s no improvement in the standards.”

Joe Geldhof of West Juneau, a member of Responsible Cruising in Alaska, which supported the citizen initiative, disagreed. He said the new rules would more widely apply Alaska’s pollution standards to cruise ships and provide “independent observers” to monitor compliance.

Gaming and income taxes could reduce Carnival Corp.’s 2007 earnings by about $24 million, according to some financial estimates. Carnival carries about 560,000 passengers annually to Alaska on 16 ships of Holland America Line, Princess Cruises and Carnival Cruise Lines.

In one of the initiative’s most unusual regulations, lines also must display commissions made on shore excursions they sell so passengers can easily see these. Geldhof compared this display to stockbrokers stating their commissions and said it would promote “transparency.” But Shively sees this as a problem for local tour operators because it exposes their pricing to competitors.

Supporters of the initiative argued that cruise lines affect the environment and ports and should pay their fair share of taxes.

Many in the state’s tourism-related businesses joined the cruise lines in opposing the measure, saying the lines already paid significant taxes. They also expressed fears that the new tax might reduce the amount that passengers spend ashore and even cause some passengers to choose other destinations.

“We can’t predict what the impact is going to be. That will be determined in the marketplace, how people respond to the cruise vacation cost,” said John Hansen, president of the North West Cruise Ship Assn., which represents the major lines operating in Alaska. The association led the effort to defeat the measure.

Cruise fans have had mixed reactions to the new taxes. Cruise Critic, an online cruise guide and network of cruise enthusiasts, asked its members whether a $50 tax would keep them from cruising to Alaska. Some respondents thought the state ought to use its own money for the purposes and were adamant that they would cruise elsewhere rather than pay the tax. On the opposite end, many said they felt the tax was a fair levy to help keep Alaska beautiful. And in between, others said they would still cruise to Alaska but not spend any money ashore, choosing to enjoy the views from the ship.