Cruise Industry Sues Hawaii Over New Tourism Tax Impacting Statewide Economy

Hawaii has enacted a groundbreaking 14% tourism tax on cruise passengers, including an 11% cruise ship passenger tax and additional county surcharges, aiming to generate nearly $100 million annually to fund climate change and environmental conservation projects. The tax, which also raises rates on hotel and vacation rentals, has faced intense opposition from the cruise industry and related local businesses, which argue that it unfairly increases costs, threatens the viability of cruise tourism, and violates constitutional provisions such as the Tonnage Clause. The Cruise Lines International Association (CLIA), along with local companies, has filed lawsuits in Honolulu federal court challenging the tax’s constitutionality and asserting it imposes a disproportionate burden on cruise operators, who already pay substantial fees and taxes. Industry leaders warn that the increased costs, potentially adding hundreds of dollars per passenger, could deter visitors and significantly harm Hawaii’s tourism-driven economy, which benefits from nearly 300,000 cruise visitors annually contributing over $600 million. The legal battle highlights a conflict between Hawaii's efforts to fund climate resilience and the economic interests of the cruise sector, with the state emphasizing the tax's role in addressing critical environmental challenges such as rising sea levels, coastal erosion, and wildfires. The case remains pending, with state officials yet to comment publicly on the lawsuits.