Downtown sour on cruise ship initiative

$50 head tax to be decided at Aug. 22 primary

Posted: Sunday, July 02, 2006

An upcoming state ballot initiative that would impose a cruise ship passenger tax could be a nail in the coffin for some Alaska-owned South Franklin Street businesses, according to owners of those shops.

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In the Aug. 22 primary election, voters will decide whether the cruise ship industry should be taxed $50 per passenger. The measure also would tax cruise ship gambling while in state waters, mandate ocean rangers on board ships and require disclosure of the cruise ship's commission on shore excursions.

If the initiative, known as Measure No. 2, passes, Ella Tiedemann, a salesperson at George's Jewelry and Gifts, said she may not come back to work for her store next year.

"Local businesses here are dying," she said.

In 1990, the shop employed 10 sales clerks but now has two on staff, she said. She credits the drop to the industry directing crowds to shops owned by out-of-town companies that advertise with the ships. Also, those stores are located closer to the docks on the south end of the street and passengers rarely wander past the Red Dog Saloon toward downtown.

Making an Alaska trip more expensive could shrink her store's customer base even further, she said.

Cruise ship companies plan to tack the $50 on to passengers' tickets if the measure passes.

For a family of four, that's $200 out of their wallets that could be spent on T-shirts or hot dogs sold in Juneau, said Chris Garcia, a sales associate at Little Switzerland jewelry store, which is not owned locally.

Sean Edwards at jeweler Fire and Ice said the extra costs may not affect customers looking for high-end items in his store, but will chip away at other passengers' buying power.

Some tourists are arriving on ships that are charging as little as $395 for the voyage in May and September, said Ginger Blaisdell, owner of Franklin Street Boutique. It would be bad policy to create a 15 percent tax increase for those companies, she added.

Supporters of the initiative say the cruise ship industry is not paying a fair share of state taxes and are getting Alaska's pristine beauty for free, said Gershon Cohen, a sponsor of the initiative.

As several jewelry stores continue to open at the various ports of call each year, the trend shows passengers are expecting to spend a lot of money, said Cohen, based in Haines.

"I'm definitely for it," said Joan Deering, owner of the Paradise Bakery and Cafe, downtown across from Marine Park.

The tax would improve infrastructure so the city, which receives about 1 million cruise ship visitors a year, can handle the influx and make the city a better place for locals, she added.

According to a federal law, money collected from the head tax must be used for infrastructure and services related to the industry. If not, Cohen said cruise ship companies could sue the state.

"The money that is raised is actually going back to them," he said.

It could be used to improve docks and roads, build public restrooms and assist places such as a Yakutat clinic, which often cares for sick passengers stopping through the northern Panhandle town, he said.

The tax on gambling would not have such strict requirements and could be used for non-industry related items.

The cruise ship industry continues to run an aggressive campaign with television, radio and newspaper ads urging voters to reject the measure.

Cruise ship industry representatives have said that the increase in fares may discourage passengers from coming to Alaska. A 7 percent decline in cruise ridership out of Vancouver, British Columbia, shows some evidence that tourists are mindful of higher costs, according to Charlie Ball, president of Princess Tours.

The decline was partly due to passengers picking Washington as a favored port because the airfare to Seattle was $45 to $75 less than the flight to Vancouver, he said.

Business owners such as Jeanne Mungle-Curry of the Alaska Soap and Candle Co. said tourists will come to Alaska even if they have to pay an extra $50 as the state and the local region offer such a unique experience.

A travel agent in Connecticut told The Associated Press last year that his clients were still willing to pay an extra $500 to $1,000 for the same trips they took a year or two ago, as prices have risen for many popular destinations.

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