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Federal Judge Clears Path for Hawaii’s Climate Change Tourist Tax, Including Cruise Passengers
HONOLULU, HI – A federal judge has ruled in favor of Hawaii’s new tourist tax, which aims to generate nearly $100 million annually to combat the impacts of climate change. The decision, handed down by U.S.
District Judge Jill A. Otake on Tuesday, specifically allows the state to include cruise ship passengers in the levy, which is set to begin in 2026.
Governor Josh Green signed the landmark legislation in May, making Hawaii the first state in the nation to implement such a tax to address a warming planet. The funds will be allocated to tackle critical issues such as eroding shorelines, wildfires, and other climate-related challenges.
The new law increases existing taxes on hotel rooms and vacation rentals and introduces an 11% tax on the gross fares paid by cruise ship passengers. This tax will be prorated based on the number of days vessels spend in Hawaii ports.
The Cruise Lines International Association (CLIA), along with a Honolulu-based cruise ship supplier and tour businesses from Kauai and the Big Island, challenged the tax in court. Their lawsuit argued that the new law unconstitutionally taxes cruise ships for the privilege of entering Hawaiian ports. Plaintiffs also contended that the increased cost would deter tourists, particularly with counties authorized to add an additional 3% surcharge, potentially bringing the total tax on prorated fares to 14%.
“Cruise tourism generates nearly $1 billion in total economic impact for Hawaii and supports thousands of local jobs,” stated Jim McCarthy, a spokesperson for the CLIA. “We remain focused on ensuring that success continues on a lawful, sustainable foundation.”
According to court records, the plaintiffs plan to appeal the decision. They have requested an injunction pending the appeal and a ruling by Saturday afternoon, given the law’s January 1 effective date.
Hawaii Attorney General Anne Lopez affirmed the state’s commitment to defending the law, emphasizing that it requires cruise operators to contribute their fair share to address climate change threats.
The U.S. government also weighed in on the case, intervening to call the tax a “scheme to extort American citizens and businesses solely to benefit Hawaii,” arguing it conflicts with federal law.