Cruise ships calling at Ketchikan are dropping their tax-exempt standing. Ketchikan metropolis and borough councils voted to repeal legal guidelines that had exempted cruise ships from paying gross sales tax whereas docked within the metropolis.
Gross sales Tax Relevant for Items and Providers Purchased Onboard Ships Whereas in Port
Till now, they haven’t been required to pay tax on purchases made onboard akin to in stores and eating places. Native lawmakers sought to abolish the tax-exempt standing because it deprived native Ketchikan merchants.
“It’s been a longstanding inequity for native brick-and-mortar companies that promote related objects to what’s offered aboard the vessel, the place you might have basically one working tax-free and one not,” mentioned Borough legal professional Glenn Brown.
Ketchikan Gateway Borough Mayor Rodney Dial added: “One of many causes that the Ketchikan Metropolis and the Borough are working to repeal it now could be simply merely it’s an fairness situation. We would like equity between what the cruise ships are charging and what the brick and mortars are charging,”
A supplemental monetary impression report by Brown initiatives further gross sales tax income of as much as $300,000 yearly. Cruise ships would pay the identical fee of tax as native companies. “That is drafted so when they’re within the territorial waters of the borough, its taxable gross sales aboard the vessel,” Brown added.
Nevertheless, Brown acknowledged that forecasting potential tax revenues appropriately is difficult. He cited anecdotal proof in Juneau that some cruise ships shut stores when in port fairly than pay the tax. Juneau eradicated the tax exemption in 2022.
“There could also be some gross sales that not happen,” he mentioned. Different Alaska ports which can be topic to shipboard gross sales tax embody Sitka and Skagway. The brand new regulation imposing the gross sales tax will take impact earlier than the beginning of the 2025 cruise season. The primary cruise ship is scheduled to name at Ketchikan on April 17.
