Joe Geldhof: On Head Tax and the Cruise Ship Industry.

• Author: BONHAM, NICOLE A.
• Position: Alaskan taxation information

As Alaska thawed this spring and greeted its first waves of seasonal visitors, state politicos were at work in special session, wrangling with "the cruise ship issue." A series of issues, actually, including the pernicious question: to tax or not to (head) tax. In the end, the cruise industry felt the weight of new pollution control measures for Alaska waters, but avoided any new head tax.

Joe Geldhof is a veteran of the head tax debates in Alaska. Geldhof was coauthor of the successful 1999 initiative levying a $5 head tax on cruiseship passengers arriving in Juneau. A Juneau attorney, Geidhof also helped draft a citizen initiative to place a $50 head tax on next year's statewide election ballot.

Editors note: For this piece, Alaska Business Monthly also requested an interview with the North West CruiseShip Association. The industry organization, representing nine cruise lines doing business in Alaska, declined to participate, in part due to the recent passage of House Bill 260, which resolved some industry issues.

ABM: With the cruise industry infusing substantial revenue into the local economies of Ketchikan, Juneau and other Southeast communities (towns otherwise dependent on boom-bust extraction sectors like logging, fishing and mining), why push the envelope by, in essence, taxing the hand that feeds you?

Geldhof: Actually the hand of the foreign-flagged cruiseship industry is slapping, not feeding, Alaska. Cruising in Alaska is a billion-dollar industry, give or take a few million. The cash flow generated by Alaska cruising operations is terrific but not much money generated by the large cruiseship operations actually sticks in Alaska. Sure, the folks selling fudge and t-shirts think cruisers are great, but the tax revenue derived from this industry is relatively small. Most tours and other shoreside excursions (helicopter tours, fishing expeditions), associated with cruising are sold on board the ships and that usually eliminates sales tax revenue for the municipality where the services are delivered.

Compared to mining, oil & gas, fishing and other portions of the tourism industry, the foreign-flagged cruisers enjoy a sweetheart tax structure. The foreign-flagged cruisers' tax structure is a comparative advantage that has allowed the industry to post substantial profits even engaged as they are in a very labor-intensive industry. It's a niche enjoyed by no other industry and it's irresponsible to let the industry have a free ride...