The Celebrity Millennium sails into the Port of Juneau early on the morning of July 26, 2021. During this voyage, onboard purchases were exempt from the City and Borough of Juneau's sales tax. However, a new ordinance winding through the City Assembly could change that for next year. (Dana Zigmund/Juneau Empire)

City seeks to tax onboard purchases

“An issue of tax fairness”

Next summer, cruise ship passengers sailing through Juneau’s waters may not be able to sail past the tax collector.

Currently, the City and Borough of Juneau require cruise ship operators to track and report all sales of goods and services inside the borough’s boundaries. However, the sales are exempt from the city’s five percent sales tax—leaving $21 million worth of on-board sales untaxed.

At Wednesday night’s finance committee meeting, Assembly members agreed to move forward on an ordinance that would end the exemption and potentially net an additional $1 million for city coffers.

According to Jeff Rogers, finance director, the Finance Committee looked at the measure last year, but progress was thwarted by the COVID-19 pandemic response.

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Rogers said the tax would apply to food sales, such as specialty dining, alcohol purchases, spa services, gifts and artwork.

“The early morning hours are probably not a rich time for cruise ships,” Rogers said. “But, in the evening there’s specialty dining, alcohol and spa services. The ship is selling all kinds of things all day long.”

Rogers said that cruise ship companies already track sales, so he didn’t see the ordinance as a barrier for operators.

He said that other jurisdictions, including Miami, Florida, assess sales tax, so the technical mechanism is already in place on most cruise ships.

“This is an issue of tax fairness,” said Assembly member Greg Smith pointing out the disparity created when a ship sells goods that are not taxed while a local provider on the dock must collect and remit sales tax.

Rogers and City Manager Rorie Watt said that the tax would not apply to ships passing through the city’s waters but not docking.

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The ordinance will move forward for a public hearing.

Rogers acknowledged that collection details—such as determining the boundary or timeframe for assessing the tax—still need to be addressed. He said work on those aspects will continue as city leaders consider the ordinance.

• Contact reporter Dana Zigmund at dana.zigmund@juneauempire.com or 907-308-4891.

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