It's Official: Cruise Lines Drop Alaska Lawsuit Over Head Tax

July 6, 2010

Alaska Head Tax

(7:30 p.m. EDT) -- A handful of cruise lines, which were prepared to fight Alaska's controversial head tax in court, have officially dropped their lawsuit, MSNBC reported via the Associated Press last Friday.

The lines, including those owned by Royal Caribbean Cruises Ltd. and Carnival Corp., agreed to drop the suit if the state legislature approved a bill proposed by Governor Sean Parnell -- a move which was made in April.

The bill decreased the head tax from $46 to $34.50, but cruise lines will be reimbursed an additional amount each time a ship calls in Juneau, Ketchikan or both. Refunds will total $7 per person for calls in Ketchikan and $8 per person for calls in Juneau; if a sailing calls in both ports (which 75 percent of Alaska cruises do), $15 per person will be refunded to the line, thus further reducing the amount from $34.50 to $19.50 per person.

Royal Caribbean spokeswoman Cynthia Martinez says the line has not issued a statement at this time, and Vance Gulliksen, a Carnival representative, referred all questions to the Cruise Lines International Association and the North West CruiseShip Association. The latter, in turn, referred all questions to the Alaska Cruise Association. ACA President John Binkley said the Association will release a statement when the stipulation is filed but did not specify a time frame.

The tax, which several cruise lines argued was 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.

--by Ashley Kosciolek, Copy Editor