We recently saw a campaign advertisement from Al Gross criticizing Sen. Dan Sullivan for “stripping a provision from his own party’s tax bill that would have had cruise operators pay federal taxes.” We are not certain if his position was ill-informed or whether this was purely a partisan political attack, however, we cannot think of a more clear example of Sen. Sullivan successfully fighting for Alaskans and Alaska businesses.
The purpose of the Federal Tax Cuts and Jobs Act was to reduce taxes to help boost the economy. However, one provision stood out as a tax increase, which targeted the visitor industry. The proposal was estimated to raise $700 million based upon the amount of time cruise ships spend in U.S. waters. This would have disproportionally harmed Alaska, given Alaska cruises spend so much time in U.S. waters, unlike Florida cruises, which immediately head for international waters and Caribbean destinations.
When we first learned of this provision, many of us in the industry became immediately concerned and reached out to Dan Sullivan for help. Dan understood that raising the cost to visit Alaska substantially more than other destinations will have long-term negative impacts on our businesses, Alaska jobs, and local communities.
With employment over 50,000 and an economic impact of over $4 billion, the visitor industry is vital to Alaska’s economy. Cruise ships bring approximately 60% of our summer visitors statewide and in some communities such as Juneau and other Southeast Alaska ports, cruise visitors can make up 90% or greater of all visitors. In fact, the visitor industry in Southeast was projected pre-COVID to become not only the largest private sector employer but the largest employer in the region. The excess of $1 billion in direct spending by passengers, cruise lines and crew are responsible for millions in taxes paid to the state and local governments.
Thankfully, Dan Sullivan understands the importance of the industry and the potential devastating impact a $700 million tax increase would have on our economy. With his usual tenacity and determination to fight for Alaska, he worked countless hours over the weekend to remove the Alaska target tax increase. Thanks to his efforts, Alaska remained a competitive destination and our economy has continued to see record setting growth in the visitor industry. This is also a good example where Dan fought his party’s leadership for the best interest of Alaska.
The coronaairus has hit our industry especially hard. Our cruise season was virtually eliminated, with devastating blows to our economy. While some may not survive, many are holding on in hopes of a recovery in 2021 with the Cares Act assistance and visitor industry relief championed by both Sens. Murkowski and Sullivan, and Congressman Don Young.
We understand that it might be politically attractive for Al Gross to attack cruise line companies, however, the tax he cited in his campaign piece was not about the health of cruise lines but the health of Alaska’s economy and ensuring national tax policy does not negatively impact our state..
Al Gross also states that he would work to prohibit discharge of untreated sewage on inside waters. This statement is based on false information perpetuated by environmental organizations. In 2002, Sen. Frank Murkowski sponsored legislation which closed the “donut holes” or areas within Alaska waters which were more than three miles from shore. The new requirements prohibit all untreated sewage under 12 miles from the U.S. shoreline. The Alaska Legislature passed a law mirroring the federal requirement in 2001. Alaska now has some of the highest standards in the world, only permitting cruise ship discharges from Advanced Wastewater Treatment Systems, which are significantly more effective than most municipal systems.
In the future, we hope Al Gross will research his issues more carefully, especially as they pertain to our industry and the livelihood of so many Alaskans.
Dennis McDonnell is president of Alaska Coach Tours, an employee owned company with headquarters in Juneau and operating divisions in Juneau, Ketchikan, Sitka, Skagway and Seattle. Ethan Berto is president of Survey Point Holdings, which is headquartered in Ketchikan, and, with its subsidiaries Cruise Line Agencies of Alaska, Amak Towing and Southeast Stevedoring, provides services to the visitor industry.