Is fifty dollars a tipping point?

Tuesday’s decision by Alaskan voters to charge a 50 dollar head tax on tourists arriving by cruise ship could be a “tipping point” according to Tourism officials in Vancouver, the port where the bulk of the cruise ships calling on Prince Rupert originate from.

In a hotly contested plebiscite, Alaskan voters were subjected to multi media blitzes from the cruise line anxious to protect a pot of gold that has served them well over the last twenty five years.

And it’s for a good reason they were fighting the fight since there's more than just fifty bucks a head at stake for the cruise lines. Besides the charge of $46 dollars per passenger and $4 for pollution control monitoring, Alaska wants a share of the take from the gambling operations onboard.

With passage of the measure, Alaska will take in one third of the ships gambling proceeds, require the cruise lines to pay corporate income taxes and purchase pollution discharge permits for their vessels waste water.

They will also be required to come clean on the commissions they receive from all of the on shore activities that they partake in.

All in all, it makes for some tidy profit diversion going to Alaska from the Cruise lines, which has some worried that the Cruise Lines may just cutback on their trips to Alaska, which of course would have an impact on our local industry as well.

The Daily News had a report on the local angle of the tax moves by Alaska, which we provide below, followed up by a story out of Vancouver that suggests that the downward trend of cruise trips out Vancouver could speed up with the new measures in place further up the coast.

CHOPPY WATER AHEAD AFTER CRUISE DECISION
By Leanne Ritchie
The Daily News
Wednesday, August 23, 2006
Page One

Ports of call for cruise ships in B. C. are pondering the impact of a new $50 head tax passed by Alaskans in yesterday’s primary election.

Alaska voters narrowly handed multinational tourism companies a defeat, ignoring a $2 million advertising campaign. With 70 percent of precincts reporting, ‘yes’ votes on Ballot Measure 2 led by nearly 6,800 votes (52.7 percent to 47.3 percent).

Both opponents and proponents of the measure say the result is unlikely to change in the final tally.

The question B. C. ports are now asking is how the new head tax, corporate taxes and pollution regulations will impact B. C.’s developing cruise industry.

“Our concern would be anything that adds to the operational costs for the cruise lines in Alaska could impact the overall theatre, “said Shaun Stevenson, business manager at the Prince Rupert Port Authority.

“We are a player within the Alaska cruise theatre. Our concern would be the impact on future growth because we are positioned to be a participant on future growth.”

The measure will impose an excise tax of $46 per passenger per voyage. Another $4 dollar fee would be charged to independently monitor cruise ship pollution controls.

The measure would tax one-third of the ships’ gambling proceeds, require cruise lines to pay corporate income taxes and require them to get state pollution discharge permits for the ships’ waste water.

The measure also would require ships disclose the commissions they make from onshore businesses, a requirement that is already on the books in state law but is not enforced.

Greg Wirtz, chair of Cruise B. C. and manager of cruise operations and marketing for the Vancouver Port Authority, said it’s really an issue for a foreign country, yet B. C. is intricately linked.

“In B. C., we can’t help but be affected by the impact of the vote although we don’t take a direct position on it because we really have no influence and control of it,” he said.

“We will be responding to it as the details become more known. For us our message is B. C. is a coast that is open for cruise business and is developing its cruise business.”

John Hansen of the Northwest Cruise Ship Association, an organization that lobbied against the measure, described it as a disappointing defeat.

“A lot of individuals and companies and small business, people throughout the state of Alaska who worked so hard on the campaign are disappointed,” he said. He explained there is 90-days for the Alaska legislature to come up with regulations to implement the measure in the bill.

“That means it will take us through the end of this season, so it won’t have any impact this year. Next year, certainly the state of Alaska will have some tasks ahead of it making sense of all this,” he said.

How it will impact the million cruise passengers Alaska currently sees each season will be up for the marketplace to decide, he said, however he has argued all along the industry will take a hit.

However, Gerhon Cohen, one of the authors of the measure, said B. C. shouldn’t see any impact and neither should Alaska.

“Their claim $50 is going to stop people from cruising to Alaska is simply not based on any logic or fact. People are spending three to four thousand dollars on a dream vacation coming to Alaska and there simply is no way the cost of filling up your car with gasoline is going to stop people from making this trip. It’s one and half per cent of the cost of the average week-long cruise to Alaska,” said Cohen.

He said the most remarkable things about the results of the vote is that the measure passed in almost every town where cruise ships stop.

“The industry mounted a campaign of propaganda of the likes that no one has ever seen. Had it not been for a total saturation of TV mailers, phone banks, radio, we probably would have won 80 or 90 per cent of the vote,” he said. “I am proud to be an Alaskan because we have rejected a campaign from a multi-billion-dollar corporation and that’s just something that isn’t often done.

“I am more optimistic today about where we are going as a society that I have been in a long time … aside from the cruise ship issue itself. We beat a three million campaign with seven thousand dollars.”

Cohen expects to see the cruise lines start challenging the measure results in court and going to legislature to modify measure, which they are allowed to do if the change is not considered substantial.

“The industry has been getting a free ride for 25 years on pollution, taxation, on unfair business practices and hurting local business by steering people to their own stores or businesses where they get kickbacks,” he said. “Prince Rupert is now getting into this industry in a bigger way and hopefully they go into it with their eyes open.”


Alaskans slap tax on cruise passengers
$50 cost per person another hit to industry, local tourism official says.
Darah Hansen, Vancouver Sun; with files from Reuters and CanWest News Service
Published: Thursday, August 24, 2006

Vancouver's struggling cruise ship industry suffered a blow this week from Alaskan voters who passed a package of taxes and environmental regulations on the industry, including a $50 tax on each cruise passenger.

In a state-wide ballot Tuesday, voters passed an initiative that will assess the $50 tax on each cruise passenger and tax cruise lines' corporate earnings and gambling revenues reaped when the ships are in Alaska waters.

The initiative also requires cruise ships to obtain waste-water discharge permits while operating in Alaska and to pay increased fines for any waste-water violations.

In Vancouver -- from which close to one million Alaska-bound passengers set sail annually -- tourism officials reacted with concern.

Tourism Vancouver spokesman Walt Judas said the additional $50 could prove "the tipping point" for an already beleaguered industry.

While the tax isn't much on its own, Judas said, it adds up when combined with rising airline ticket prices, gas prices and the rising Canadian dollar, which closed Wednesday at 89.86 cents US.

"It's just one more thing that could persuade people to stay at home," he said.

Since 2001, Vancouver has seen a steady slide in the number of passengers passing through the port. According to statistics provided by the Port of Vancouver, the numbers have shifted from 1.06 million passengers in 2001 to 910,172 in 2005. As of July, this year, the numbers were down again by another 11 per cent.

Port officials cited an aggressive campaign targeting the cruise industry out of Seattle as the major reason: Post 9/11, Americans prefer to leave from U.S. port and there are more direct flights from U.S. cities to Seattle.

Vancouver port spokesman Duncan Wilson said Wednesday cruise ships are vital to the city.
"Every cruise ship that sails out of the harbour leaves $2 million in our local economy," he said.
Concern over any potential impact of the new tax was less palpable in Victoria, where close to 300,000 cruise ship passengers are expected to visit this summer.

"It will obviously have an impact on the travelling public and it will cost you and I more money to go away, but I think the ships will continue going up to Alaska," said Greg McAllister of King Bros. Ltd. shipping agents.

B.C. Tourism Minister Stan Hagen wouldn't say Wednesday what effect the new tax may have on the province.

"We'll just have to wait and see," he said.

Hagen said it may take until the start of next year's cruise season -- typically launched in May -- before the real impact can be measured.

The new tax comes as companies offering Alaskan cruises, such as Carnival Corp. and Royal Caribbean Cruises Ltd., already face a slowdown in business in the Caribbean as well as high fuel costs. Alaskan activists on both sides of the issue saw the initiative as a judgment on an industry that takes about one million passengers a year to Alaska.

The effort was not meant to punish the cruise lines but simply to put them under the same type of taxation and regulation that cover other Alaska industries, said environmental activist Gershon Cohen, one of the initiative sponsors.

"Is Alaska still open for business? Absolutely. But is Alaska going to sell its votes? Apparently not anymore," Cohen said.

The $50-a-head tax is expected to bring in about $50 million a year, not including other levies imposed under the initiative, said Mark Edwards, an official at the Alaska Department of Revenue.

One cruise line official said the initiative would weigh on Alaska visitor numbers because of the new costs and regulatory burdens which would be placed on the companies.

"In the end, the only people who pay are the passengers," said John Shively, vice-president of Holland America Line Inc., a unit of Carnival. "So the price is going to go up. And I think Alaska is our most expensive destination now."

But analysts said the impact of additional taxes would likely be minimal because Alaska cruises tend to be more expensive than those to the Caribbean.

"Adding $50 to a multi-thousand-dollar cruise is probably not a deal-killer for most people," Susquehanna Financial Group analyst Robert LaFleur said.

Those opinions were echoed by residents of Vancouver who were at Canada Place Wednesday night to bid bon voyage to family and friends aboard the Carnival Spirit cruise ship as it pulled away from the dock.

"If you can pay the thousands of dollars for the cruise, you can afford it," said Ron Pathman of Vancouver.

Lynette Goodwin, also of Vancouver, said she's going on an Alaskan cruise next week. She said she probably wouldn't notice if the price went up.

"We wouldn't know if we were paying an extra $50," she said.