A federal judge ruled a new climate change levy can go ahead as planned despite strong opposition and a legal challenge by the cruise industry.
The ruling allows for the increase of the transient accommodation tax on hotel stays and vacation rentals. Importantly, it includes a new 11% tax on cruise ship guests for the first time.
Cruise ship guests now liable for tax
This is calculated on the cruise fare, on a pro-rata basis for the number of days ships are docked in Hawaii ports. It is set to begin at the start of 2026.
Hawaii Gov. Josh Green signed into law a climate change levy to increase tax revenues to mitigate climate impacts on the islands.
The inclusion of the cruise ships in the transient tax within the bill was strongly opposed by the industry.
Cruise Lines International Association sued to halt it, claiming it was unconstitutional. The cruise industry’s argument was supported by the federal government, which filed a motion to intervene.
The government claims it is a “scheme to extort American citizens and businesses solely to benefit Hawaii.”
CLIA vows to appeal ruling
CLIA plans to fight on and get the ruling overturned. “Cruise tourism generates nearly $1 billion in total economic impact for Hawaii and supports thousands of local jobs, and we remain focused on ensuring that success continues on a lawful, sustainable foundation,” CLIA spokesperson Jim McCarthy said.
“On behalf of its member cruise lines, CLIA will continue to pursue this matter constructively through the courts.’
The green fee increases the transient accommodation tax for visitors by 0.75%, to 11%. Local counties can impose their own levies of up to 3%.
Hawaii estimates the new tax could generate up to $100 million per year.
