Cruise lines making billions in profits

Posted: Sunday, August 20, 2006

The central issue underlying Ballot Measure 2 is whether taxpayers or the industry should pay for cruise line's impacts on public services and infrastructure. Given that the proposed $46 "head tax" can only be spent servicing the industry itself, this is more like an industry user fee rather than a tax. If the measure does not pass, then taxpayers will continue to pay for the costs of these impacts. Should we?

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Communities routinely offer tax breaks and other implicit subsidies to entice industrial development. Such incentives are often important for community development. But if they are prudent, communities will expect that once established, successful industries will then become full fledged community partners, carrying their full share of the burdens they impose.

The cruise line industry in Alaska is now very well-developed and quite profitable. The two largest owners, Carnival Cruise Lines and Royal Caribbean Lines have profit margins above 12 percent on worldwide revenues exceeding $16 billion, generating net profits exceeding $2.7 billion, a substantial portion coming from operations in Alaska. Such large profits could easily absorb the $50 million or so that Ballot Measure 2 would cost them without any increase in passenger fees, so we may confidently dismiss concerns that the head tax will result in fewer passengers. The executives of these corporations are unlikely to increase passenger fares if it would damage profitability more than simply absorbing some or all of the costs.

So the issue boils down to whether Alaskan taxpayers, or else the shareholders and executives of the cruise line industry (some of whom make millions per year), should pay for the impacts of their operations on Alaskan public services and infrastructure. I do not see why ordinary working families, many of whom are struggling to make ends meet as it is, should continue to subsidize the cruise ship industry any longer.

If Ballot Measure 2 passes, property tax revenues previously used to defray cruise line impacts could be used for other services that directly benefit taxpayers, or even to reduce property tax rates. Having just been presented with a 15 percent increase in my property taxes, I am in no mood to contribute any of it to cruise line shareholders. Not when the industry can easily afford to pay instead out of present profits. Vote yes on Ballot Measure 2.

Jeffrey Short

Juneau



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