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.
“Having the cruise industry in Juneau has been very beneficial for this community,” Nankervis said.
“I think with the potential job loss of state employees looming in the very near future it behooves us to try and be good neighbors with the folks that like to come here and do business and try to continue to keep them coming here and doing business.”
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 $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, Cruise Lines International Association 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 ships close their shops while ships are in port, Binkley added.
The lone dissenting voice came from Assembly member Jesse Kiehl, who argued that it was a question of fairness.
“My barber has to collect and remit sales tax and bars around here have to collect and remit sales tax,” Kiehl said. “It’s only fair to ask others who provide those goods and services in the borough to do the same thing.”
Meanwhile, a lawsuit brought against the borough by the cruise ship industry over the spending of a $5 per head tax remains pending in federal court.