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Thursday, August 24, 2006 - Page updated at 01:11 PM

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New Alaska tax cracks down on cruise lines

Seattle Times staff and news services

The cruise industry has taken a direct hit with the apparent approval in Alaska of a $50 tax per cruise passenger.

The measure, a citizen's initiative, also would tax the ships' gambling proceeds; impose various other taxes; and require state pollution discharge permits for ships' wastewater.

The initiative won more than 52 percent of the vote the Alaska primary election, with 87 percent of the state's precincts reporting by Wednesday. Problems with Alaska's new touchscreen voting machines forced hand counts in some areas and delayed a final tally of the Tuesday vote until later this week.

Cruise lines funded a campaign to defeat the tax, spending between $1 million and $2 million on ads, but failed to turn back the proposal which was endorsed by Alaska's largest newspapers.

"Our challenge was always to get beyond the idea that this was just a $50 head tax," said John Shively, vice president of government and community affairs for Seattle-based Holland America Line, a major player in Alaska cruises.

Shively said the initiative's other provisions, including an income and gaming tax, several environmental provisions and language to force disclosure of commissions that cruise lines earn on shore excursions (already a law but not enforced), were not well understood.

Shively said he didn't know what the exact consequences of those provisions would be. "One thing we do know, it will be more expensive to cruise to Alaska," he said.

Sponsors of the passenger tax said the industry should pay its fair share. The money would be designated for improving ports and harbors and other visitor services.

Travel agents said the additional $50 wouldn't deter most people from cruising to Alaska, but might be the final straw for some. Alaska cruises from Seattle start around $850 a person (for an inside cabin at the beginning or end of the season). Most passengers pay substantially more for a cabin, and a week-long cruise can easily cost more than $2,000 per person once the costs of shore excursions, onboard alcohol, cruise-ship tips and air fare are added in.

About 950,000 people cruised in Alaska last summer, when about 11.2 million people worldwide took a cruise.

Gershon Cohen of Haines, one of two primary sponsors of the ballot measure, said the vote showed that Alaskans wanted change. His partner, Joe Geldhof of Juneau, said Alaskans saw through a slick advertising campaign.

"It made them question who was paying for this and who was running this campaign, and when they figured it out, it turned people off," Geldhof said.

Copyright © 2006 The Seattle Times Company

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