Here’s Some Frequently Asked Questions About the Cruise Industry in Alaska
Q. How did the loss of the entire 2020 cruise season and greatly reduced 2021 season impact Alaska?
A. Alaska lost $3.3 billion in lost revenues, taxes and jobs, according to the state. Small business revenue statewide fell 12% as compared to pre-COVID and many shut down, often permanently. While the loss of the ships hit Southeast the worst, it impacted the rest of the state.
Q. Has the visitor industry fully recovered from the pandemic?
A. No. Tourism jobs are still lagging. Developing enough capacity to serve more than 1 million cruise visitors after two years of little to no tourism has been a significant challenge for regional businesses according to the Southeast Conference. In a typical year Southeast businesses increase their labor force by 8,000 workers in the summer months, relying on long-term relationships to ramp up these employment numbers on an annual basis. In 2022, however, these worker supply chains had been broken and regional employers have been competing in one of the strongest national job markets in the last 50 years.
In June of 2022, tourism jobs were up by 20% over June 2021 as 2,000 more tourism workers flooded back into the region. Despite these significant gains, June jobs remain 3,100 workers below 2019 levels. More here. https://www.seconference.org/wp-content/uploads/2022/09/SE-by-the-numbers-2022-Final.pdf?2070f3&2070f3
Q. How much do cruise lines pay to state and local governments?
A. $121.8 million in taxes and fees. This includes a $34.50 passenger fee that is shared with local ports. Other state revenues include environmental fees, corporate income tax and a casino tax. Many municipalities collect sales tax and property tax, along with bed and vehicle rental taxes.
State Collects Revenue from Visitors in Many Ways
Cruise line payments: $40.2 million
Q. How is the commercial passenger vessel (CPV) excise tax shared with the state and port committee?
A. CPV excise tax revenue is shared with the first seven port communities a ship visits. If a port city is in an organized borough, the city and borough each receive $2.50. Since FY2013, 18 municipalities have shared in $176,192,064 of CPV taxes. In addition to shared CPV revenue, it is not uncommon for the Alaska State Legislature to appropriate additional funds for cruise vessel related grants.
Q. Why can’t we tax cruise passengers to fund state government?
A. The U.S. Constitution, through the Commerce and Tonnage clauses, restricts the use of passenger taxes to services that are directly connected to the passenger and vessel. These restrictions allow residents and goods to flow freely from state to state without onerous local taxation. Imagine what a cross-country trip would cost if you had to pay a new tax every time you crossed a state line. The Tonnage clause restricts the states from imposing taxes on any shipment of cargo without the consent of Congress. Taxing passengers to pay for services available to all citizens is considered restrictive of interstate commerce. In a recent court decision, a federal judge ruled that the per-passenger cruise ship fees levied can only be spent on projects that directly benefit the ships.