Senate panel hears support for cruise tax cut

April 05, 2010

The Legislature is considering two bills that would lower the cruise head tax. (File/KTUU-DT)

by Ted Land
Monday, April 5, 2010

JUNEAU, Alaska -- The state Legislature has about two weeks left in session to make a decision on the state's cruise ship head tax.

It started hearings Monday on a proposal to reduce the burden on cruise lines and their passengers.

If they couldn't show up in person, they called in from all across the state: Tour operators, lodge owners and local governments who are keeping a close eye on the head tax bill.

They pleaded for help.

"Without relief being granted to the industry, our biggest industrial base is suffering a very significant blow," said one man.

"We've seen close to between a 20 percent on average decline and our business itself was just over 20 percent," said another.

"I'm terrified; I'm perplexed. I don't know what to do as we see these numbers diminish. How do I continue to support the Alaskans that I've been supporting?" asked Tanja Cadigan, of Caribou Crossings Art, in Juneau.

Tourism companies say they're losing business because of the cruise ship head tax.

Bills in the House and Senate would cut the tax from $46 a person to $34.50 and allow deeper offsets for certain local head taxes.

"We don't know for certain how many family-run small businesses that serve visitors will weather these declines. We do know that the estimated job loss over the two-year period is estimated to be 5,000 jobs," said Curtis Thayer with the Department of Commerce.

"There's no reason to decrease this fund by 25 percent and put a cap on it down to $34. We're losing 15 percent of our visitors next year. Why not decrease it by 15 percent and bring it down to $39?" suggested Chip Thoma with Responsible Cruising in Alaska.

Meanwhile, the Alaska Cruise Association, an industry group that is suing the state over the head tax, says it will withdraw the suit if the Legislature reduces the tax.

Assistant Attorney General Chris Poag told the Senate Finance Committee that the state is working with the industry on terms that could be finalized by the end of the week.

The head tax bills are still in committee.

The House version includes a tax credit for corporations contributing to tourism marketing, but that's making some lawmakers uneasy.

The Senate instead approved a $5 million grant to the Alaska Tourism Industry Association to spur marketing.

Contact Ted Land at tland@ktuu.com

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