Johanna Jainchill
Johanna Jainchill

Royal Caribbean International made a pointed political play earlier this month when it said it would pull the Serenade of the Seas from Southeast Alaska in 2010 and attributed the decision, in part, to the high cost of doing business there.

"This is the result of our further expansion into global markets and the relatively high costs, to our company and our guests, associated with Alaska sailings," the line said in a statement.

"We hope steps will be taken to reduce those costs and make Alaska more competitive in the U.S. and global marketplace," it said.

One of the costs, Royal Caribbean noted, is the $50 head tax that was voted into law by a citizens referendum in 2006. Of course, if the cruise industry believed $50 per passenger per sailing would deter would-be cruisers, lines would not have imposed the fuel surcharges over the last year that were generally more than $50 per person, per cruise.

But Royal Caribbean makes a point. Whether the costs are valid or not, it is more expensive for cruise lines to sail in Alaska than in most destinations. As the line noted, beyond a host of taxes and fees, it pays both corporate taxes and taxes on its gaming revenues, which it said no other state charges.

In the past, Alaska per diems might have justified that. But Alaska cruise prices, like all others, are down.

The Alaska tourism industry might hope that Royal Caribbean's move will be the catalyst it needs to get some of those taxes repealed, but it is unlikely to happen in the current economic climate.

Alaska is the only state that does not collect either a state sales or income tax. According to the Tax Foundation, a nonpartisan Washington-based tax research group, Alaska's state and local tax burden has consistently been the nation's lowest.

Instead of taxing its citizens, the state depends heavily on its oil revenues. But now, with oil revenues down, the government would be hard pressed to give up any of its tax income. Last year, the passenger head tax alone brought about $50 million to state coffers.

John Binkley, president of the Alaska Cruise Association and an advocate of repealing many of the taxes on the industry, said it might be "politically difficult" to successfully push for a repeal during this legislative session, "particularly with the general revenues of the state being much less than they have been in the past.

"The state is now looking at a billion and half dollar deficit. So the reality is, getting changes to that tax structure is going to be difficult."


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