Cruise Lines Agree to Drop Lawsuit Against Alaska in Exchange for Head Tax Decrease

March 22, 2010
Alaska Head Tax (6:28 p.m. EDT) -- Cruise lines fighting for the abolishment of a per-passenger Alaska head tax have reportedly agreed to drop a lawsuit against the state after its governor appeared at the industry's annual Cruise Shipping Miami convention and proposed a tax decrease.

According to the Anchorage Daily News, Governor Sean Parnell met with several cruise line executives and expressed interest in a compromise that would cut the tax by 25 percent -- from $46 to $34.50 per passenger -- in exchange for an end to the suit and the return of more cruise ships to the region.

This year, Alaska is expecting its lowest number of cruise passengers in several years -- a loss of about 140,000 people, the newspaper claims. The declining numbers have small-business owners worried that they'll have to close up shop if something isn't done to bring visitors back to the area.

The tax, which several cruise lines argue is illegal because it discriminates against larger ships (those carrying 250 passengers or more), is largely blamed for the relocation of ships from several major cruise lines. It was voted into place by state residents in 2006 and has been used to generate funding for state projects -- many of which have nothing to do with port improvements.

The Anchorage Daily News also reports that the governor is hoping the decrease can be voted upon as part of a tourism marketing bill that's currently in front of the legislature, which is set to end its year by adjourning on April 18, but it is unclear whether the change will be presented in time for a vote.

Calls to the Alaska Cruise Association -- which is representing Carnival Corp., Royal Caribbean Cruises Ltd. and a handful of other lines in the lawsuit -- were not immediately returned. Carnival referred all inquiries to the association, and efforts to reach Royal Caribbean, as well as Governor Parnell's press secretary, for comment were unsuccessful.

We'll keep you updated.

--by Ashley Kosciolek, Copy Editor