By Dan Fagan
Taxes deter investment. It’s one of the cornerstone truths of economics. It’s as true with the oil industry as it is with tourism. Taxes matter.
And now we are beginning to see the impact of higher taxes in Alaska on our economy. BP and Conoco Phillips officials have said recently higher state taxes will leave some projects on hold because they are no longer economically viable meaning fewer jobs in our state.
And now we are seeing the same from the cruise ship industry. Royal Caribbean announced Tuesday it will pull service for one of its cruise liners next year costing us tens of millions in lost revenue. The reason: the slumping economy means tourists aren’t buying as many tickets. The more expensive the trip, the less likely the ship will attract passengers.
That’s where taxes come in. According to John Binkley, president of the Alaska Cruise Association, state and local governments through higher taxes and fees are forcing some customers looking for good deals during a bad economy to choose other options than Alaska.
“So now all of the sudden those additional taxes and fees are more than 20 percent of the actual cruise cost,” Binkley said. “So it becomes another factor that the consumer looks at when they’re deciding, ‘Are we going to cruise to Alaska?'”
What those in government don’t seem to understand is higher taxes have their most devastating affect on an economy if they make an option less economically viable. The $50 dollar head tax Alaska voters foolishly passed a couple of years ago is a perfect example. For a family of four that adds an additional $200 dollars to the price of a cruise. Then you add ports fees and other government related charges, the already high price of cruising to Alaska becomes less attractive of an option. So passengers choose a less expensive destination and Alaska ends up without their dollars.
It doesn’t matter what the tax rate is, one hundred percent of nothing is still nothing.
During this time of economic trouble, Alaska should lead the nation when it comes to spurring growth by lowering taxes. We should reduce taxes on tourism, and the oil industry. The old adage is true but rarely spoken in Juneau these days; “You can’t tax your way to prosperity.”
What also is true, there is no faster way to kill jobs than tax them to death. Let’s return to the days in which we were a state that is open for business.
Dan Fagan hosts a radio call-in program and is publisher of the Alaska Standard, an electronic news site (www.TheAlaskaStandard.com).