Legislature(2003 - 2004)

2004-03-18 House Journal

Full Journal pdf

2004-03-18                     House Journal                      Page 2993
HB 537                                                                                            
HOUSE BILL NO. 537 by the House Rules Committee by request of                                       
the Governor, entitled:                                                                             
     "An Act relating to the levy, collection, and administration of                                
     sales and use taxes on tourism services; and providing for an                                  
     effective date."                                                                               
was read the first time and referred to the House Special Committee on                              
Ways & Means and the Labor & Commerce and Finance Committees.                                       

2004-03-18                     House Journal                      Page 2994
The following fiscal note(s) apply:                                                                 
1.  Zero, Dept. of Community & Economic Development                                                 
2.  Zero, Dept. of Community & Economic Development                                                 
3.  Fiscal, Dept. of Revenue                                                                        
The Governor's transmittal letter dated March 16, 2004, follows:                                    
"Dear Speaker Kott:                                                                                 
Under the authority of article III, section 18, of the Alaska                                       
Constitution, I am transmitting a bill that would impose a five percent                             
sales and use tax on tourism and other services in our state.  This tax                             
would apply to a broad range of activities, such as: taxes on items sold                            
or used on cruise ships, shore side activities, transient                                           
accommodations, and guided tours.  The tax would raise                                              
approximately $19 million in FY 05 and $49 million for the state's                                  
general fund on an annual basis thereafter.                                                         
In many regards, this proposal represents a modest "user-pay"                                       
approach.  The state would be partially reimbursed for costs of                                     
providing a wide variety of services related to the travel industry.  The                           
Office of Management and Budget recently completed an informal                                      
survey of state agencies to determine the amount of tourism related                                 
expenditures in their respective FY 04 budgets.  The resulting list of                              
costs potentially attributable to the cruise industry totaled $116                                  
million, some of which is currently offset by other "user-pay"                                      
Some local communities have benefited over the years as passengers                                  
and crewmembers purchased goods and services in communities and                                     
paid local sales, use, and "head" taxes.  At the same time local                                    
communities were taxing the cruise ship industry, passenger traffic                                 
increased dramatically.  For example, cruise ship passenger traffic to                              
Ketchikan increased from 321,780 passengers in 1993 to an expected                                  
830,000 passengers in 2004.  The increase in passenger traffic                                      
occurred despite the effects of the SARS epidemic, global terrorism,                                
and moderate economic growth, a record 9.52 million passengers                                      
cruised worldwide in 2003 -- a 10.2 percent increase over 2002.                                     
Cruise lines anticipate another record year in 2004, with                                           
approximately 10.6 million guests.                                                                  

2004-03-18                     House Journal                      Page 2995
Given the growth of the industry and the fact Alaska is such a unique                               
and wonderful destination for cruise ship companies and their                                       
passengers, I am convinced Alaska can recover part of its costs                                     
through reasonable taxes without appreciably affecting the growth of                                
the Alaska cruise ship industry.                                                                    
Alaska will always welcome its guests.  However, Alaska should join                                 
48 of the other 49 states and such countries as Jamaica and the                                     
Bahamas that raise revenue from transient accommodation through                                     
some form of tax or fee.  This is only fair.  Alaska residents have been                            
paying, and will continue to pay, such taxes when travelling or                                     
cruising within these states or abroad.                                                             
I urge your support for this bill.                                                                  
                                Sincerely yours,                                                    
                                Frank H. Murkowski