Legislators consider tourism tax bill

Several businesses want to tax customers to pay for more marketing

Posted: Friday, February 13, 2004

Several tourism businesses told legislators Thursday they want to tax their customers so they can spend more money marketing Alaska to visitors. But not all in the industry favor the plan.

The Alaska Travel Industry Association is pushing bills in the House and Senate that would put a 2 percent tax on day trips, rental cars, recreational vehicle rentals, lodging, souvenirs and other tourism-related goods and services.

The tax would go into effect if businesses generating at least 51 percent of the revenue to be taxed agreed to it. The plan is modeled after a tax fishermen pay to fund the Alaska Seafood Marketing Institute.

Scott Reisland, who owns an RV campground near Denali National Park, said small businesses like his are hurting, and they don't have the resources by themselves to sell Alaska to tourists outside the state.

"We've had three years of consecutive declines," Reisland said. "I see other campground folks closing their doors, leaving, unable to make a living."

The money would go to the travel industry association. ATIA president and chief executive officer Ron Peck said while cruise ship travel to Alaska may be up, independent travel has been declining for two years.

Border crossings are down 8.5 percent since 2001, and airport arrivals are down 3.5 percent, Peck said.

About 30 people wearing blue buttons supporting the plan milled in the hallway outside a Senate Labor and Commerce Committee hearing on the bill Thursday. Inside, they faced some opposition.

Bettye Adams of the Alaskan Hotel in Juneau said the tax is not fair because cruise ships would not pay it. She said the ships, which she called floating hotels, already have an unfair advantage.

Their passengers do not pay the 12 percent in local taxes her customers pay, she said, and adding another 2 percent would make the playing field more uneven.

A memo from the Legislature's legal department suggests the tax may not be constitutional, Adams said.

The memo, which addresses proposed regional seafood marketing organizations, questions whether allowing members to vote on a tax would be delegating the Legislature's power to tax. It also questions whether the Legislature would be effectively dedicating revenues to a specific purpose, which is not allowed in the state's constitution.

It's not clear how much money the tax would raise. The industry is guessing it will bring in $17 million to $18 million.

The state Department of Revenue estimated $9.7 million could be raised through taxes on tours, lodging, ferry and railroad fares, but did not have enough data to estimate revenues from retail sales.



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