Alaska Approves Controversial Cruise Tax
August 24, 2006
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With over 99 percent of precincts reporting, it's pretty much a done deal: Alaska voters have approved a ballot measure imposing a $50 head tax on cruisers. The current tally from Tuesday's primary election is 52 percent in favor of the measure, and 48 percent against it.
As a refresher, Ballot Measure 2 (commonly referred to as the "cruise ship tax") involves an eight-page proposal with several controversial provisions -- many of which have been kicked around in the past, but only this year netted enough petition signatures to make it to the voting booths.
Here's what's involved -- and how it affects you:
Taxes on Passengers
The Legalese: The initiative would impose a $46 per-voyage tax on cruise passengers. Also, a $4 per-person berth fee would be assessed so that state-employed marine engineers (Ocean Rangers) licensed by the Coast Guard could come aboard cruise ships and observe health, safety, and wastewater treatment and discharge operations. The proceeds would be deposited into the state general fund, subject to legislature.
In Plain English: This one's pretty cut and dry -- cruise passengers will shell out at least $50 more for their Alaska cruise vacation before they even set foot on their ship. Initial news reports indicate that the monies not allocated to the Ocean Rangers would be used for improvement and maintenance of ports and harbors.
Taxes on Cruise Lines
The Legalese: The initiative would change the way cruise ship corporate income tax is calculated (cruise lines would also be required to disclose profits made on shore excursions). Additionally, a 33 percent tax would be levied on gambling profits in Alaska waterways and ports.
In Plain English: This one hurts the big guys' pockets. Carnival Corporation already released a statement estimating that the gaming and income taxes could reduce 2007 earnings by about $0.03 per share. However, execs cannot yet estimate the impact the initiatives will have on Carnival Corp's business in Alaska (the company currently deploys 16 cruise ships there: eight from Holland America Line, seven from Princess Cruises and one from Carnival Cruise Lines).
The Legalese: The initiative also allows for civil lawsuits to be filed against an owner or operator of a cruise ship, or against the Department of Environmental Conservation, for an alleged violation of any permit condition, provision of environmental statutes or performance of duties.
In Plain English: Most cruise passengers won't be affected by this one as it concerns areas of Alaska's economy other than tourism. According to the opposing statement offered by the Division of Elections, this could encourage frivolous lawsuits in which lawyers can collect up to half of any fines collected. "Out-of-state attorneys will line up and flood Alaska's court system ... the measure would even allow individuals to sue the state of Alaska."
The good news is the current Alaska season will be over before any of the above changes could go into effect. Alaska's constitution states that an initiated law becomes effective 90 days after the lieutenant governor certifies the election returns -- and that could be awhile (especially if a recount is requested).
What if you've already booked for 2007? A spokesman for Carnival Cruise Lines tells us that because the actual legislation is not written yet, it is unknown at this point whether already booked Alaska cruisers would be charged the tax or grandfathered into pre-vote pricing.
"We are disappointed that the Ballot Initiative 2 has passed," Carnival Corp. CEO and Chairman Micky Arison said in a statement, "as we believe this will inhibit the future growth and expansion of Alaska's tourism business."
--By Melissa Baldwin, Associate Editor