Juneau Assembly Suggests to Exempt Cruise Industry From Sales Tax

By ,   January 16, 2017 ,   Cruise Industry

Juneau Assembly moved ahead with a proposal to exempt cruise industry from sales tax for services and goods sold onboard while ships are in port.

The finance committee voted 8-1 on Wednesday evening to approve a motion by Mayor Ken Koelsch to amend the tax code and formalize the exemption.

The tax exemption isn’t a done deal. The proposed ordinance will have to be drafted and brought to a public hearing before it can be enacted.

Deputy Mayor Jerry Nankervis said he strongly supported the mayor’s initiative. A long-standing agreement requires third-party tour operators aboard cruise ships to pay sales tax and that would not change, the city’s Finance Director Bob Bartholomew told the committee.

The mayor’s initiative will certainly be welcomed by the cruise line industry, which says its passengers pay nearly USD 8 million in sales tax while onshore in Juneau, but has historically not paid sales tax for goods and services sold aboard its vessels.

“The cruise lines believe the practices for the last 15 years have been correct; that incidental sales on board the vessels, while in port, are exempt from sales tax,” John Binkley, CLIA Alaska president, said in a written statement before the meeting.

He noted a similar exemption exists in Ketchikan and claimed it created an incentive for cruise ships to dock longer in a community. Cruise liners close their shops while docked in port.

Meanwhile, a lawsuit brought against the borough by the cruise industry over the spending of an USD 5 per head tax remains pending in federal court.