Alaska editorial: Keeping a cool head on cruise ship tax

Posted: Monday, December 21, 2009

The following editorial first appeared in the Anchorage Daily News:

Word that two more cruise ships won't be coming to Alaska in 2011 has renewed industry talk against the head tax passed by Alaska voters in 2006.

That tax of $50 is passed on to cruise passengers by the industry. Four dollars of it covers the Ocean Ranger program to monitor the discharge of pollutants in Alaska waters.

The notion that those passengers will opt out of a $4,000 to $7,000 trip - in some cases the trip of a lifetime - for the sake of $50 is hard to believe, given what appear to be other, far more important factors. They include the global recession, a surplus of ships and the prospect of higher fuel costs to meet new international emissions standards.

Further, cruise traffic actually increased slightly in the first two years (2007-08) the head tax was collected, before the financial meltdown wracked the world economy in fall 2008.

However, in tough times travel is down. If we were to cut industry a temporary break on the head tax, would Carnival, for example, bring back Holland America and Princess ships in 2011? If so, that's something the Legislature and the industry could talk about.

The industry does raise a legitimate question about how the head tax is spent. Although the tax is imposed by the state, a federal law, backed by Rep. Don Young in 2002, restricts the proceeds to projects that are directly related to the cruise ships. That means dock and wharf facilities and passenger amenities at dockside. The state isn't free to use that money - around $36 million in 2009 - any way it likes. The Alaska Cruise Association has sued the state in part over some potentially dubious uses of the tax - money for an infirmary at the Alaska Zoo in Anchorage, for example.

The federal restriction that ties the state's hands is one we could do without. Imagine if the oil industry induced Congress to put the same handcuffs on Alaska's oil taxes, so the money could only be used on things that benefit the oil industry. Alaskans would be outraged. But that's the law as it stands now, so that's what we have to work with.

Rather than rail against the head tax, the industry should focus on making sure it's spent appropriately. Some good ideas have emerged in preliminary discussions among initiative backers and industry representatives. Come up with a comprehensive list of port improvements for southeast and southcentral Alaska. Our port cities have legitimate needs - now including a cruise passenger dock in Anchorage.

Collect the head tax at its current rate long enough to cover those projects.

Then trim the tax back to maintenance levels, including money for a modest fund toward eventual replacement of those port projects.

This would satisfy both the demands of federal law and the spirit of the initiative, which sought to guarantee that the industry pay its way in Alaska and cruise as cleanly as possible in our waters.

The purpose of the taxes and tight pollution monitoring that voters imposed in 2006 was not to be punitive. That makes no sense. The cruise industry delivers tens of millions of dollars to Alaska's economy.

The purpose was to make sure Alaska receives fair value for the use of its beauty and resources, which have yielded the industry rich profits over the years, and to enforce the highest possible environmental standards.

Fulfilling that purpose doesn't require treating the initiative as writ in stone. It has already been amended to ease vendor disclosure requirements, among other changes, and the Department of Environmental Conservation has granted ships more time to meet the most stringent discharge limits.

Let's talk with the industry. But let's remember this is business. We want a healthy, robust cruise industry in Alaska - but one that spreads the health and the wealth.

Head tax compromise could work for both Alaska and the industry.

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