Cruise Association will challenge AK head tax

Head tax was adopted by Alaska voters as a ballot initiative in 2006

Posted: Friday, September 18, 2009

Cruise ship companies unhappy with Alaska's $50 cruise ship passenger head tax are expected to challenge the tax in federal court on constitutional grounds, possibly as soon as today.

Klas Stolpe / Juneau Empire
Klas Stolpe / Juneau Empire

The suit will be filed in federal district court by the Alaska Cruise Association, a group made up of the state's major tour companies and headed by former legislator and gubernatorial candidate John Binkley.

Binkley was unavailable for comment Thursday, and an ACA spokeswoman said all comments about the lawsuit would have to come from him.

The tax, formally called the commercial passenger vessel excise tax, was adopted by Alaska voters as a ballot initiative sponsored by Responsible Cruising for Alaska in 2006.

The measure passed with 52 percent of voters in favor, despite strong opposition from the cruise ship industry.

The $50 tax includes $4 to operate the Ocean Ranger environmental monitor program, and also imposed stringent wastewater standards and extended corporate income and gambling taxes to the industry.

Responsible Cruising for Alaska President Chip Thoma said the legal challenge is not unexpected.

"We've been waiting for this for 10 years," Thoma said. "That's when Juneau first implemented its own, much smaller, head tax.

Sen. Dennis Egan, D-Juneau, said he wished the industry had not chosen to go to court.

"I'm disappointed that they wouldn't work with the Legislature to try to resolve the issues," he said.

The Legislature agreed to modify the wastewater standards last year, but has balked at the industry's attempts to have the head tax repealed.

Egan said he was told of the court challenge Thursday by Princess Cruises lobbyist Kent Dawson.

Dawson's office said calls about the lawsuit should go to Binkley.

Princess Cruise's parent company is Carnival Corp., the world's largest cruise company. Carnival CEO Micky Arison told industry analysts during the summer "we don't want to litigate" over the head tax.

It appears the industry and its local allies have been unable to find legislative leaders willing to support rolling back the tax.

"We wanted to hopefully find some leadership that agreed with us and would do what is in the best interest of the industry and tourism to Alaska ... but we have not been successful in doing that yet," Arison said.

Egan said there probably wouldn't be enough support in the Legislature to overturn a vote of the people. Gov. Sean Parnell said after taking office in July that he, too, would be reluctant to overturn a voter initiative.

Federal law requires taxes such as the head tax be spent on costs related to cruise ships. That may be where the law is challenged, said Joe Geldhof, a Juneau attorney and one of the initiative sponsors.

"If you start building infirmaries at the Alaska Zoo and start telling everybody that's because cruise ship passengers get off and use the zoo, you're asking for trouble," Geldhof said.

Geldhof said he expects the head tax to survive a court challenge. Juneau projects with head tax money have focused on docks and other items closely related to cruise ships, he said.

In Southeast, the head tax was supported by residents of Juneau, Sitka, Petersburg, Wrangell and Haines. Residents of Ketchikan, Skagway and Hoonah were opposed.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.



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