Juneau has done it the past three years. The city of Ketchikan and the Ketchikan Gateway Borough will start doing it this year.
And Wrangell may do it too.
“We’re considering it,” Borough Manager Mason Villarma said of amending Wrangell Municipal Code to require cruise ships and tour boats to collect sales tax on goods and services they sell while in port.
Juneau changed its code in 2021 to apply to onboard sales when the ship is tied up at the dock or in Gastineau Channel in front of town. Both the city and the borough of Ketchikan changed their respective codes last month to start collecting tax from onboard sales.
Juneau collects not only its 5% sales tax but also its 3% tax on liquor sales.
The Ketchikan Gateway Borough will collect sales tax on purchases of goods and services aboard cruise ships docked within the borough starting April 1 after voting 6-1 last month to remove a 2003 ordinance exempting onboard ship purchases from the tax.
The borough’s action followed a similar move by the city a week earlier.
Using data from Juneau, staff with the Ketchikan Gateway Borough estimate that removing the exemption for cruise ships sales while in port could net an additional $200,000 to $300,000 in revenue each year.
Wrangell would not be anywhere close to those six-figure estimates for new revenues. Ketchikan gets about 1.5 million cruise visitors each summer; Wrangell is on the schedule for 40,000 to 45,000 passengers this year.
Villarma said he does not have an estimate for how much Wrangell could earn, but anything would help as borough finances get tighter.
“It’s an easy target,” he said of onboard shop sales.
The borough estimates its total sales tax receipts in the current fiscal year at $3.6 million — the single largest source of revenue for the budget.
Wrangell’s tax rate is 7%. The combined rate for the Ketchikan city and borough totals 8% April through September, to earn more from visitors, and drops to 5.5% October through March.
Ketchikan Gateway Borough Assembly Member Jaimie Palmer fully supported changing the tax code when it was presented for a vote. “And if there’s other exemptions like this out there, then I hope that we find them and remove them,” she said.
As a small-business owner, Palmer said if cruise ships decide to close their onboard stores and restaurants to avoid collecting the tax, tourists could spend the money in town, which is “even better.”
Villarma said he expects to bring an ordinance before the Wrangell assembly this spring to change the tax code.
The Ketchikan Daily News contributed reporting for this story.
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