Skagway, Alaska, has formally enacted a brand new gross sales tax coverage on land excursions and shore excursions – and the cruise traces don’t prefer it one bit.
Cruise corporations have lengthy been exempted from together with fee charges within the taxes on Skagway shore excursions which are offered by the cruise traces.
For context, the fee charges are often paid to the cruise line on prime of the tour value for arranging the tour – which is how the cruise model income.
However in December 2024, a brand new tax ordinance was handed with the aim of amassing taxes on the total costs that vacationers pay pretty and constantly – whether or not they’re visiting through cruise ships or not. Because of this the cruise traces’ commissions at the moment are taxable as nicely.
The Cruise Strains Worldwide Affiliation (CLIA) is now representing the cruise trade in a battle in opposition to the brand new tour tax coverage – which they mentioned in an announcement dangers “double taxation and inserting undue monetary pressure on cruise friends and Alaska companies alike.”
When requested for a remark, CLIA directed native information shops to Steven Mahoney, an Anchorage-based tax legal professional who shouldn’t be concerned within the lawsuit.
“Beneath Alaska legislation, we imagine that the Skagway ordinance is against the law. It’s not acceptable, and it must be reversed,” Mahoney mentioned.
Learn Additionally: Alaska Cruise Ports: What Are Your Choices?
The legal professional’s interpretation of the legislation is that Skagway can not tax the fee charge on excursions the place neither the transaction nor the service of reserving occurred within the small, coastal city.
By taxing the cruise line’s fee charges, Skagway is actually penalizing excursions that had been booked from different areas – and even different international locations.
The cruise trade chief additionally echoed that the US and Alaska’s Constitutions state that the port can solely tax actions which have a “substantial relationship to that neighborhood.”
Mahoney additionally famous that the US Structure doesn’t permit Skagway to intrude in interstate commerce, which suggests transactions that happen between two completely different US areas on a cruise ship shouldn’t be taxed regionally both.
Because the added tax will seemingly flip into extra charges for cruise friends, the cruise traces seemingly don’t need to compete in opposition to native companies that don’t must cost a fee so as to revenue as nicely.
CLIA filed the lawsuit on Might 8, 2025, and it’s unclear when litigation might transfer ahead.
Might the New Taxes be a Good Factor?
Emily Deach, Skagway Borough Supervisor, reaffirmed in an electronic mail to native information outlet KTOO that the aim of the tax is simply to advertise equity.
“The underside line is that Skagway made this variation to deal with tour gross sales by the cruise traces the identical as different gross sales of services and products inside the municipality,” Deach confirmed.
Nevertheless, the brand new coverage is also fairly worthwhile. Skagway’s municipal gross sales tax price is at the moment at 5%, and with round a million cruisers crusing to the vacation spot yearly, the income may begin rolling in.
Skagway’s native tax additionally places it consistent with different in style Alaskan ports that don’t give the cruise traces an exemption, together with Juneau and Sitka.
Juneau, for instance, has been charging a 5% tax for onboard buy and an extra 3% tax on alcoholic drinks since 2022 – and isn’t receiving the identical pushback.
On April 1, 2025, Ketchikan additionally put a brand new tax coverage into impact that aligns with Skagway’s new tour tax – during which previously exempted cruise ships now need to pay the two.5% native tax at this southeastern coastal city as nicely.
However with 1.5 million cruise friends calling on Ketchikan yearly, this variation may rake in as much as $300,000 to learn the city and the port yearly.
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