Hawaii cruise passengers face new climate change tax after court ruling
A federal judge’s ruling clears the way for Hawaii to include cruise ship passengers in a new tourism tax to help pay for the impacts of climate change, a levy expected to take effect in early 2026.
U.S. District Judge Jill A. Otake on Tuesday rejected a request to block officials from enforcing the new cruise law.
In the first such levy implemented in the nation to help address global warming, Hawaii Gov. Josh Green signed a law in May that increases tax revenue to address shoreline erosion, wildfires and other climate problems. Officials estimate that this tax will generate nearly $100 million per year.
The tax raises rates on hotel room stays and vacation rentals, but also imposes a new 11 percent tax on gross rates paid by cruise ship passengers, starting next year, prorated by the number of days ships spend in Hawaii ports.
The Cruise Lines International Association challenged the tax in a lawsuit, along with a Honolulu company that provides supplies and provisions to cruise ships and tour operators on Kauai and the Big Island that rely on cruise ship passengers. Among their arguments is that the new law violates the Constitution by taxing cruise ships for the privilege of entering Hawaii ports.
The plaintiffs’ lawyers also argued that the tax would hurt tourism by making cruises more expensive. The lawsuit notes that the law allows counties to levy an additional 3 percent surcharge, bringing the total to 14 percent of the prorated rates.
“Cruise tourism generates a total economic impact of nearly $1 billion for Hawaii and supports thousands of local jobs, and we remain focused on ensuring that success continues on a legal and sustainable basis,” association spokesman Jim McCarthy said in a statement.
According to court records, the plaintiffs will appeal. They asked the judge to grant an injunction pending appeal and requested a ruling by Saturday afternoon, given that the law takes effect Jan. 1.
Hawaii will continue to defend the law, which requires cruise operators to pay their share of the transient lodging tax to address climate change threats facing the state, state Attorney General Anne Lopez said in a statement.
The U.S. government intervened in the matter, calling the tax a “scheme to extort American citizens and businesses for the sole benefit of Hawaii,” in violation of federal law.
