Thursday, April 8, 2010

Cruise Tax bill to Increase Tourism

Alaska governor plans to introduce cruise tax bill

Associated Press Writer
updated 9:52 a.m. ET, Fri., March. 26, 2010

JUNEAU, Alaska - Alaska Gov. Sean Parnell introduced legislation Thursday aimed at reducing the state's head tax on cruise ship passengers and bringing more tourists to the state.

He first made the proposal last week after returning from a cruise ship trade show in Florida. He sees a rollback — from $46 a person to $34.50 — as a way to address industry claims that Alaska's cost of doing business is too high. He hopes it will lead to increased ship deployments and help settle a lawsuit with the Alaska Cruise Association, one the attorney general last year pledged to vigorously defend.

There are no guarantees.

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Leading lawmakers, while open to a tax reduction, earlier this week balked at combining it with a measure allowing tax credits for corporations contributing to statewide tourism marketing efforts. Parnell's proposal includes a tax credit provision for corporations making money off tourism in Alaska, capping contributions eligible for credits at $20 million this year.

It also allows for offsets of local head taxes that Chip Thoma, president of Responsible Cruising in Alaska, said will drop the state's tax share to $19 a passenger — potentially providing millions less for capital projects. His group called Parnell's plan an "industry-written measure" that amounts to "cap and skim."

The governor's office released a copy of the bill late Thursday.

Parnell spokeswoman Sharon Leighow confirmed the bill would further reduce the head tax to $19, including deductions of charges in Juneau and Ketchikan.

Voters approved the head tax in 2006, and it's been a thorny issue since. Supporters said the tax is meant to help cover the cost of infrastructure needed for large ships coming to port. Critics countered that it's onerous and unconstitutional.

Cruise Association President John Binkley has blamed Alaska's regulatory climate and tax costs for the expected loss of three ships, accounting for about 142,000 passengers, this season. But some, including those who helped lead the voter initiative, are skeptical the tax is keeping ships away and point instead to factors like the recession.

Parnell sees his proposal as a win for all involved — and not as a corporate giveaway.

"I made a very pointed case (to industry representatives) that they would need to demonstrate that, in a public process, that this would bring ships. That it would create Alaska jobs and not just be a transfer of dollars from the state to their bottom line," he told reporters.

Parnell said one company agreed to postpone deployment decisions until May, to see what legislators do. He said he's asked other cruise lines to do the same, and to testify publicly, to make their case for the changes.

Binkley said there are discussions under way with Attorney General Dan Sullivan on a possible "stipulation" to end the pending federal lawsuit. He declined further comment, saying in part that he wanted to see Parnell's proposal.

The Legislature is currently scheduled to adjourn April 18.

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