Skagway may shift tax burden to tourists

Year-round sales tax would be replaced by higher seasonal tax

Posted: Tuesday, July 31, 2001

City officials in Skagway are considering a plan to tap into the pocketbooks of migratory tourists to provide a year-round source of revenues for its government.

Its city council is expected to decide on Thursday whether to ask voters to replace the annual 4 percent sales tax with a 5 percent tax that would be in place for the six-month summer tourism season. During the off-season months between October and March the tax would be zero.

It's a proposal that has angered several residents in a town of about 880 that relies heavily on the tourism industry.

"Our community literally survives on this industry and what it brings us," said Steve Hites, who owns a tour company called Skagway Street Car Co. "I believe it targets a certain group of people - specifically the visitors in the summer - and as such it's not equitable."

Hites said he fears the tax could have a cumulative effect on cruise line passengers, who also pay sales taxes and other taxes in other towns along the route.

"The cruise ships have other world destinations they can go to," Hites said. "We are competing with Australia, New Zealand, Norway and Russian ports."

City Council Member Dan Henry is a chief proponent of the tax. The proposal would bring in an additional $700,000 during the tourist season and mean about $226,000 less in revenues during the off-season, Henry told KHNS-Radio in Skagway recently. The town currently takes in $3.3 million in sales tax revenues, a city spokeswoman said.

"The reality is very simply that our tourism industry has grown dramatically year after year. Our services are not on par with them," Henry said.

But Henry said the tax still would be lower than in other stops that cruise ships make along the Inside Passage and the coast.

Sitka and Juneau each have a 5 percent sales tax, and Juneau has a $5 head tax on cruise ship passengers.

Skagway Mayor John Mielke said the city is not in "dire straits" financially, but that the tourism industry has brought with it added expenses.

The city recently built a water tower to accommodate cruise ships that take on drinking water there, and during the summer months the city employs two additional police officers for its six-member force. The city has also added two 911 dispatchers, he said.

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