Economic Q & A

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 of Alaska revenues, 2019

Total:$125.6 million
Cruise line payments: $38.6 million

Source: 2019 Fall Revenue Source Book

Municipal revenues, 2017

Total:$88.5 million

Source: McDowell Group, The Role of Visitors in Alaska’s Economy, 2017

Hotels, lodges and bed and breakfasts in the state’s major destinations saw bed tax revenues rise in 2018, a reflection of more tourists visiting the state. Bed tax revenue in the Municipality of Anchorage totaled $28 million, an increase of $1.8 million over 2017. Rental vehicle taxes rose $400,000 during the same period.

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 and ship visits. If a port city is in an organized borough, the city and borough can receive $2.50. Between 2007 and 2016, 17 city or borough governments have shared in the CPV excise tax revenue totaling $114.3 million

For the state’s latest report on how communities spend their CPV revenues, click here.

Click here to view the Alaska Department of Commerce, Community and Economic Development’s 2017 Commercial Passenger Vessel Excise Tax Annual Report. Click to enlarge the revenue chart below.

CPV share

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.

Q. Where do the numbers come from?

2017 AEDC Economic Forecast

2014 Cruise Market Watch- Cruise Pulse™

2014 North American Cruise Market Profile

CLIA Cruise Industry Outlook 2019

2018 McDowell Group The Role of Visitors in Alaska’s Economy

2019 AEDC Economic Forecast

Municipality of Anchorage

Alaska Railroad Corporation

Alaska Marine Highway System