August 23, 2006

Alaskans approve $50-a-head cruise tax

By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - Alaskans passed a package of
taxes and environmental regulations for large passenger ships,
striking a blow to cruise ship operators already struggling
with record fuel prices.

In a state primary election ballot held on Tuesday,
Alaskans passed a citizen initiative that will assess a $50 tax
on each cruise passenger and tax the 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.

With 87 percent of the precincts reporting, the measure had
52.4 percent support, according to results released on
Wednesday by the Alaska Division of Elections. Full results
should be available later in the week once results are tallied
from mostly small, rural precincts.

Companies offering Alaskan cruises, such as Carnival Corp.
and Royal Caribbean Cruises Ltd., are already facing a slowdown
in business in the Caribbean as well as high fuel costs.

Activists on both sides of the issue saw the initiative as
a judgment on an industry that brings about 1 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

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

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 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.

Carnival's shares closed down 26 cents, or 0.66 percent, at
$39.22, while Royal Caribbean shares finished off 24 cents, or
0.7 percent, at $33.63 on the New York Stock Exchange.

(Additional reporting by Paritosh Bansal in New York)