Carnival to Sue Alaska Over Head Tax?

In comments today to reporters aboard the Seabourn Odyssey's maiden voyage, Carnival Corporation head Mickey Arison indicated they are anticipating a suit against the State of Alaska over the $50/person head tax which was voted on and enacted a little over 2 years ago.

Citing a recent US Supreme Court case in which a similar tax against oil tankers in Alaska was struck down, Arison indicated they've tried to work with the State, but to no avail.

I've long been an opponent of this tax. Having mostly grown up in Alaska, and worked in tourism there, I understand the importance of it to the State. However, I was not surprised by its passing, as the proponents did a good job of couching it in environmental terms (many of those provisions have been "delayed" by the Alaska Legislature as currently unenforceable due to technology issues), and also maintained that the tax wouldn't affect the visitor numbers.

While it's debatable whether or not the tax directly has had an impact on people booking, when you combine it with the economic situation and general downward pressure this past season on cruise fares, it's clear that the cruise lines cannot continue to operate in Alaska at the same levels. Several lines are pulling out ships for next season, as the actual fares for the passengers are too low to sustain operations. Fewer ships will likely increase fares and help their bottom line. Sometimes Alaska (and other locations historically) has forgotten that ships are movable assets - if the economic climate is such that they can make more in other locations, they will move the ships to where the passengers want to sail.

Passengers see the price as the total package - base fare, non-questionably fees (erroneously called Port Charges) and taxes. When taxes are too large a percentage of what the market is willing to pay to cruise in Alaska, lowering what the cruise lines themselves can make, then that's an unsustainable proposition, and the cruise lines will and have reacted.

By the way, fewer ships in Alaska was the result many of the originators of the tax bill wanted, as they had been long term, ardent anti-cruise activists, and the tax and associated regulations were one way they had to push forward that agenda. It was far less about $$$ and more about punitive measures against the industry they vehemently disliked. But they "sold" it to the voters couched in monetary terms and pro-environmental stances, many of which were outdated (the lines already had higher standards) or unreasonable (no technology exists to accommodate the requirements at this time).

It will be interesting to watch this case progress. As someone who was intimately involved in Alaska politics for many years, I know that historically Alaska has been a good partner to cruising. One US Senator's wife was a ship's godmother as I recall. I hope that relations can find an acceptable resolution, as the State of Alaska and cruising both need one another and the relationship has to be more or less in balance.

If you'd like to read the USA Today article, it can be found at CruiseLog,