New Alaska cruise tax passed by voters

Alaska cruises will get more expensive in 2007, as Alaska voters approved a proposal August 22 that would impose a $50 per person tax on Alaska cruise passengers, increase taxes on cruise line Alaska earnings, and tax gambling on cruise ships in Alaska waters.

What will the impact be? Depends on who you ask. A New England resident taking an Alaska cruise vacation would already spend a bare minimum $1,200 per person including airfare, so a $50 increase isn't seen as a deal-breaker there. But for a resident of the northwest who might simply drive to Seattle to hop on an Alaska cruise for $600 per person, the extra money might dissuade them.

The ballot initiative passed with 52% of the vote. Funds collected will go to improve public services and facilities in areas affected by cruise line tourism. The initiative also increases regulations affecting wastewater disposal and stiffens the penalties for violations.

Cruise line representatives have already voiced their concern about the new regulations and one publication has estimated that the new taxes could reduce Carnival Corporation earnings per share by up to 3 cents. That may be overstating the situation as cruise lines will likely pass much of the cost on to consumers.

Historically cruise companies have punished regions that impose such fees by moving their ships elsewhere, but while this tactic works in playing off one Caribbean island against another, it can't work in Alaska where the ships have no alternative options.

Over one million passengers cruise Alaskan waters each year. Holland America Line and Princess Cruises (both subsidiaries of Carnival Corporation) are the leaders in this region.