Alaska Gov. Sean Parnell (R) has announced plans to lower the state’s head tax on cruise-ship passengers by about $12. It’s not simply out of the goodness of his heart: he wants major cruise lines to send more ships to Alaska.

Parnell walked into a firestorm of criticism last week when he attended a cruise ship trade show in Florida. Representatives from major cruise lines attacked the Governor for the implementation of the head tax, currently sitting at $46 per head. Unfortunately for Parnell, he’s not even responsible for the tax which was instituted in 2006. Nonetheless, he took the brunt of complaints about the tax.

Carnival had previously declared the tax illegal and both Holland America and Princess announced plans to decrease the number of cruises to Alaska as a result of the tax. The Alaska Cruise Association filed a lawsuit to repeal the tax. The association claims that the industry pulled three ships from Alaska this season alone as a result of the tax. In terms of numbers, that means about 140,000 fewer tourists in 2010. In a slow economy, those numbers hurt.

There’s no word yet on whether the reduction of the tax will slow the decline – or if a complete repeal is the only acceptable answer for the cruise industry.

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Author

Kelly Erb is a tax attorney and tax writer.

Comments

  1. This reduction in taxes could save vacationers alot of money and make crusing more affordable, i know the last cruis i took i paid at least $60 in taxes.

  2. I hope this is true. A lot of people dreamt of having a cruise vacation trip but can’t afford of having one due to tax. I hope there will be other tax deduction for vacation pagckages too. If we could save more money due to tax then we can also encourage foreigners to visit the country due to low tax.

  3. I see that the governor’s plans are now in effect, with taxes due to be lowered in time for next year’s cruise season. But I do wish they would address the inequitable situation where Juneau and Ketchikan are allowed to charge municipal taxes on cruise ship visits.

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