Cruise industry group sues to challenge Hawaii's tourism tax designed to
deal with climate change
[August 30, 2025] By
JENNIFER SINCO KELLEHER
HONOLULU (AP) — A lawsuit challenging the constitutionality of Hawaii
imposing a tourist tax to deal with consequences of climate change seeks
to stop officials from enforcing the new law on cruise ship passengers.
In the nation's first such levy to help cope with a warming planet,
Hawaii Gov. Josh Green signed legislation in May that raises tax revenue
to deal with eroding shorelines, wildfires and other climate problems.
Officials estimate the tax will generate nearly $100 million annually.
The levy increases rates on hotel room and vacation rental stays but
also imposes a new 11% tax on the gross fares paid by a cruise ship's
passengers, starting next year, prorated for the number of days the
vessels are in Hawaii ports. The lawsuit, filed in U.S. court in
Honolulu this week, notes the law authorizes counties to collect an
additional 3% surcharge, bringing the total to 14% of prorated fares.
“No other State imposes comparable fees — and for good reason: It has
been a fundamental principle since the Founding that the navigable
waters of the United States are a common resource, not one to be
commandeered by individual States for their own parochial
revenue-raising interests," attorneys representing the Cruise Lines
International Association wrote in a motion asking a judge to prevent
the state and counties from collecting the tax on cruise ships while the
lawsuit is pending.
A Honolulu company that provides supplies and provisions to cruise
ships, and tour businesses out of Kauai and the Big Island that rely on
cruise ship passengers joined the cruise ship association in the
lawsuit.
The defendants are various state tax and county finance officials.
The Hawaii attorney general's office declined to comment Friday on the
lawsuit until it had been reviewed.
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The Norwegian Jewel, background, is docked in Honolulu, March 23,
2020. (AP Photo/Caleb Jones, File)
 Hawaii County spokesperson Tom
Callis said they don't comment on pending litigation. Spokesman Ian
Scheuring said Honolulu officials decline to comment until they're
reviewed the lawsuit. County representatives for Maui and Kauai
didn't immediately respond to an email seeking comment.
According to the lawsuit, the cruise ship industry draws nearly
300,000 annual visitors to Hawaii, supporting thousands of jobs
throughout the state and contributing more than $600 million a year
to the economy.
The tax would make Hawaii cruises too expensive, and potential
visitors will choose to vacation elsewhere, the lawsuit said.
The plaintiffs, in a motion seeking a preliminary injunction to
declare the law's cruise-related provisions unconstitutional and bar
its enforcement, urges a judge to act swiftly because cruise-ship
passengers typically make travel plans well in advance. A hearing is
scheduled for Oct. 31.
The impending surcharge “will begin to skew the market even before
they take effect,” causing families who would have purchased Hawaii
cruise tickets in 2026 to make other vacation plans, the motion
said.
The new law adds 0.75% to the existing 10.25% tax on daily hotel and
vacation room stays for a 11% total. Hawaii’s counties each add
their own 3% surcharge, and the state and counties impose a combined
4.712% general excise tax on goods and services including hotel
rooms. Together, that will make for a hotel and vacation rental tax
rate of nearly 19%.
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