Increasing cruise tourism in Greenland has been a hot topic both in the population and in Greenlandic politics for quite some time. Above all, how to deal with the additional costs caused by the increasing number of passengers and port calls ranks high on the list of issues. This is to be compensated financially by charging cruise operators higher fees per passenger and for the use of infrastructure, starting already next year.
A surcharge of 50 Danish kroner (about 7 euros) per passenger and a doubling of the port tax for large cruise ships from Jan. 1, 2024, are two of the items that will be submitted by the Greenlandic government to parliament for discussion starting Sept. 22. The Ministry of Finance and Equality made the announcement in a recent press release. Other items included in the draft legislation include exemption from port fees for certain cruise ships and a reduction in fees for the large passenger ships in Nuuk. In addition, smaller cruise ships (expedition ships) will not be affected by the increase in passenger tax.
Hot debate in cool Greenland
The government’s proposal will not cause joy among all parties, although the additional revenue to around DKK 5 million (around 670,000 euros) from the tax increase and up to DKK 6 million (around 800,000 euros) from the changes in port fees may well be an argument. However, there is too much fear among some stakeholders that the rapid implementation as of January 1, 2024, could discourage ship operators.
The discussion around the changes isn’t new either, but has been going on since the beginning of the summer. At that time, opponents of the increases had wrested a deal from the government that any changes and increases would not be enacted before 2025. The new proposal, however, represents a reversal and is likely to feel like a slap in the face. Why the government is pushing for rapid implementation, however, should be clear. First, most ship operators have already made and published their schedules for next year. Second, this cruise season, with nearly 700 visits to the 19 sites in Greenland, has shown that most sites struggle to handle the number of visitors per day. The infrastructure is simply not designed to handle thousands of visitors. The additional revenue is intended to change that.
New environmental and maintenance fee in Greenland municipalities
Another item that is expected to generate both discussion and additional revenue is the introduction of a municipality-dependent environmental and maintenance fee. According to rough estimates, this should bring another DKK 15 million (around 2 million euros) into the coffers of the municipalities. According to the government’s ideas, it is up to the municipalities themselves to determine the level of the fees. This is intended to give small and very small municipalities in particular an instrument for profiting from the rising number of visitors and expanding their infrastructure accordingly, without the government having to release any more money. Concerns about the fee, and especially about its implementation, came from the expedition cruise industry as soon as it was announced at the beginning of July. The industry sees difficulties in the administrative effort and in planning for the shipping companies, as the fee will vary greatly depending on the place of landing and the number of passengers landed. Especially for expedition cruises, which depend on improvisations in routing due to rapidly changing conditions, this creates great difficulties.
Whether the calculation will work out in the end remains to be seen. But Naaja H. Nathanielsen, Minister of Finance and Gender Equality, says she is convinced it will. “The estimate of the amount in the proposal is conservative. The future development of passenger numbers, ship calls and disembarkations, we will also depend on how the municipalities choose the fee levels and locations,” she explains in a note.
The increase in fees primarily affects the operators of large cruise vessels, which is likely to lead to criticism on their part. However, the increasing interest and demand from classic cruise tourists and the prospects of still making sufficient profit despite the increase should quickly silence this criticism. After all, large cruise vessels do not have too many alternative options any more when it comes to showing an Arctic region to their passengers.
Dr Michael Wenger, PolarJournal
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