A federal court decision has permitted Hawaii to implement a tourist tax on cruise ship passengers, aimed at generating funds for climate change adaptation measures. This levy is scheduled to begin in 2026.
Legal Challenge Denied
On Tuesday, U.S. District Judge Jill A. Otake rejected a request to block enforcement of the new law targeting cruise operations.
Hawaii Governor Josh Green approved legislation in May, establishing the nation's first tax specifically designed to combat global warming. The revenue will address issues like coastal erosion and wildfires, with projections estimating annual earnings close to $100 million.
The tax structure includes increased rates for hotel and vacation rental stays, plus a new 11% charge on cruise passenger fares, adjusted based on the duration of ships' stays in Hawaiian ports starting next year.
Industry Opposition
The Cruise Lines International Association, along with local businesses in Honolulu, Kauai, and the Big Island that depend on cruise tourism, filed a lawsuit contesting the tax. They argue it unconstitutionally taxes ships for entering Hawaii's ports and could raise costs, negatively impacting tourism. The law also allows counties to add a 3% surcharge, potentially totaling 14% of prorated fares.
In a statement, association spokesperson Jim McCarthy said, "Cruise tourism generates nearly $1 billion in total economic impact for Hawai‘i and supports thousands of local jobs, and we remain focused on ensuring that success continues on a lawful, sustainable foundation."
Court documents indicate the plaintiffs plan to appeal the ruling.
State and Federal Stances
Hawaii's Attorney General Anne Lopez affirmed the state's commitment to defending the law, stating it ensures cruise operators contribute to addressing climate threats through the transient accommodation tax.
The U.S. government has intervened in the case, labeling the tax a "scheme to extort American citizens and businesses solely to benefit Hawaii" and claiming it conflicts with federal regulations.
