Alaska voters narrowly approved a so-called environmental initiative that could well chill the growth in recent years of cruise ship tourism to this popular summer destination.
With 99.3 percent of the state's precincts reporting, 71,867 (52.1 percent) had voted Yes on Ballot Measure 2 and 65,996 (47.9 percent) had voted No.
Ballot Measure 2 would:
- Impose a $50 head tax on each Alaska cruise ship passenger (over and above current port fees);
- Impose a 33 percent tax on the gross income of cruise ship casinos while operating off the Alaska coast;
- Subject cruise lines to the state corporate income tax; and
- Force cruise lines to publish their financial arrangements with businesses in each Alaskan port.
The initiative will become law in 90 days, and the Alaska state government now faces the task of drawing up the new regulations. Cruise lines are also expected to mount legal challenges to some of the provisions of the measure.
John Shively, a vice president of cruise line Holland America which currently has eight cruise ships sailing Alaska itineraries, said passage of the initiative will have more negative than positive repercussions for Alaska.
"It punishes us, it punishes the people we do business with and I think it will have a real bad impact on the Alaska economy," Shively said.
The initiative ostensibly was designed to protect Alaska's environment, increasing fines for illegally dumping waste and creating a new bureaucracy of state-employed "ocean rangers" who would be put aboard every cruise ship to monitor "state and federal
requirements pertaining to marine discharge and pollution requirements."
While the stiff head tax will mean higher fares for Alaska cruises, possibly putting a damper on passenger demand, and the environmental provisions are thought by many to be duplicative and unnecessary, neither of these are believed likely to lead cruise lines to retreat from the Alaska cruise market.
But the casino tax, and the requirement that cruise lines make public details of their business arrangements with land tour operators and local merchants, potentially raise much more troublesome issues for the major cruise companies.
Casino gambling is illegal in Alaska, and cruise ship casinos must remain closed when the ships are in Alaskan ports. But federal law currently allows operation of casinos aboard the big cruise ships when a ship is more than three miles outside an Alaska port.
Beyond the question of how Alaska can tax an activity off its coast that is illegal in Alaska is the precedent acceptance of this measure by the cruise lines would set.
If Alaska enacts such a levy on cruise ship casinos and the cruise lines agree to it, which port-of-call will be next to try to get its hand in the cruise ship casino pot?
Similar precedential concerns apply to what can only be viewed as a highly mischievious effort by referendum organizers to expose the details of all financial arrangements between cruise lines and local Alaska businesses.
All of those tours that passengers book through cruise lines pay money to the cruise lines. The Alaska initiative requires that brochures used onboard cruise ships disclose the wholesale prices of these tours (the price the cruise line pays the tour operator before its markup) in 14 point
type and in contrasting color.
What cruise line (not to mention what local tour operator) is going to want to see details of these business arrangements made public? And what purpose does it serve beyond providing useful pricing information to tour operators' often-unlicensed and underinsured competitors?
Another mischievous provision of Ballot Measure 2 awards persons who complain about any of the environmental activities of a cruise ship -- or file a civil suit against a cruise line -- up to 50 percent of any fine or civil judgment. Talk about encouraging frivolous lawsuits.
The measure also seems patently unfair to Alaska's two largest cruise ports, Juneau and Ketchikan. Communities visited by cruise ships will be entitled to $5 of the $50 head tax IF and only if they agree to give up any current tax they assess.
Since Ketchikan collects $7 per passenger to retire bonds the city issued for port improvements, and Juneau collects $10 per passenger for harbor improvements, neither seems likely to give up these fees -- so none of the money presumably will go to the cruise industry's two most important ports.
The number of cruise ships sailing Alaskan itineraries has grown steadily in recent years, and they are expected to bring nearly one million visitors to Alaska this year making them the largest source of Alaska's tourists.
Among other lines with ships sailing in Alaska this summer are Carnival Cruise Lines, Celebrity Cruises, Norwegian Cruise Line, Princess Cruises, Royal Caribbean International, Regent Seven Seas Cruises and SilverSea Cruises.
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