If you don’t know what this Alaska Cruise Port Lawsuit is and what it really means, or how big of an impact it can have, well, just know the basic fact that it is actually the cruise industry going full on against the Alaska port towns and taking them to court. That’s the base of it, and just bear with us because there are many more interesting details to note, mainly about the taxation method.
Why Did Skagway Get Sued?
You’ll agree to the fact that the cruise industry is a big one in the country, and that’s why, when Skagway went on with some changes in the taxation method for shore excursions, the industry, of course, responded in a different and quite negative way to all this. First, sure, it was just a tax on the base price of tours starting in the town. And? Well, just in December 2024, they went on to approve Ordinance No. 24-12. As a result, and now with this in place, the entire price was taxed, like the full tour prices we’re talking about here.
And this was the very thing that had this lawsuit incoming, but it took a few months, and then, to be precise here, on May 8, 2025, CLIA went on with the legal proceedings against the Borough of Skagway regarding this new tax scheme.
Who Is CLIA Arguing With?
Right now, all you need to know is that CLIA is on the side of the cruise industry, so whenever we mention them, it is the cruise industry as a whole we’re talking about.
One of the things that really highlight this case is the very large difference in size of the two parties. Skagway is a very small town with only about 1,212 residents but it sees close to 1 million cruise passengers every year. Due to that, even a small change in tax law quickly becomes a major legal situation.
Therefore, this is indeed a legal battle between a very large cruise industry group and a very small town in Alaska. This is one of the main reasons why the case received so much public attention.
Why Does CLIA Say the Tax Is Wrong?
CLIA maintains that the new tax scheme is not only unfair but that it also violates the state laws and the constitutional limits. In a nutshell, what they are saying is that Skagway is imposing taxes on something which is not within its right to tax.
A major point of CLIA’s argument is that the tax is duplicative. In essence, this means that it imposes another layer of tax in a manner that they consider to be improper. There have been people who have even referred to this as double taxation. CLIA is of the opinion that taxing the entire tour price, including the cruise line’s commission, results in the same transaction being taxed twice.
Another thing that CLIA points out is that this tax is intertwined with interstate business activity and that is where it gets really complicated. A town can’t just tax as it wishes the business activities of companies that operate outside of its own geographic area. To make matters worse, CLIA insists that the tax shouldn’t be applicable to the tours that weren’t booked in Skagway itself, for example, online bookings made before arrival or bookings done on the ship.
Therefore, this dispute is not only about how much tax should be charged. Besides that, it is the issue of the extent of the taxing power of a town.
What Happened In Juneau?
The Juneau situation sheds light on the overall scenario. In April 2016, CLIA initiated legal action against Juneau for the usage of the money obtained from cruise-related passenger fees.
This is a crucial point to get. The objection of CLIA to Juneau did not end with just the levying of the fee.
