Juneau may extend tax collection to sales aboard cruise ships

The Juneau assembly will consider an ordinance that would amend the borough’s sales tax code to collect on goods and services sold aboard cruise ships, whether tied to the dock or anchored in front of town.

The ordinance would amend a provision in code that currently exempts sales aboard cruise ships from the borough’s 5% tax.

Services sold on board the ships but which are delivered or used on shore, such as bus or whale watching tours, cooking classes and other activities, already are subject to sales tax, but goods or services consumed aboard the vessel are not currently taxed.

Like Juneau, Wrangell also collects sales tax on local tours provided to cruise ship visitors.

Juneau’s finance department estimates taxing onboard sales could raise an additional $1 million a year for the borough. “In the summer of 2019, cruise companies reported approximately $21 million of exempt sales inside the borough. If those sales had been subject to sales tax, they would have generated more than $1 million in sales tax revenue for the borough,” Jeff Rogers, Juneau finance director, reported to the assembly finance committee on Nov. 3.

The committee voted to forward the proposed code amendment to the full assembly for consideration.

Juneau is budgeted to collect $45 million from sales taxes in the current fiscal year that ends June 30.

If amended, the tax would apply to food sales, alcohol purchases, spa services, gifts, artwork — most anything sold aboard ships.

While traveling outside of downtown’s Gastineau Channel but within the borough’s boundaries, which extend south about 35 miles down Stephens Passage and north about 35 miles up Lynn Canal, past Berners Bay, cruise ships would be exempt from sales tax collections.

The finance committee looked at amending the tax code last year, but the COVID-19 pandemic sidetracked the effort.

Rogers told the finance committee that other port cities, including Miami, assess sales tax on ships at the dock.

“This is an issue of tax fairness,” said assembly and finance committee member Greg Smith. It is unfair for ships to sell untaxed goods while Juneau businesses must collect the tax, Smith said, as reported by Juneau radio station KINY.