Federal Court Blocks Hawaii’s New 11% Cruise Tax Amid Climate Funding Dispute
HONOLULU, Hawaii — A federal court has temporarily blocked Hawaii’s recently enacted 11% cruise ship tax, known as the “Green Fee,” which was designed to fund climate change mitigation efforts across the island state. The Ninth U.S. Circuit Court of Appeals issued an injunction on December 31, halting enforcement of the tax while an ongoing legal challenge proceeds.
The tax, part of Hawaii’s broader Transient Accommodations Tax (TAT) expansion, was intended to raise additional revenue from tourists, particularly cruise passengers, to support the newly established Climate Mitigation and Resiliency Special Fund. This fund aims to address the state’s environmental challenges exacerbated by climate change. However, the Cruise Lines International Association (CLIA), alongside a cruise ship supplier, filed a lawsuit in September contesting the tax’s legality.
The lawsuit argues that the tax extension violates both the U.S. Constitution and federal law, imposing an unfair financial burden on cruise passengers who already face substantial fees and taxes. The CLIA also warned that the tax could deter visitors, jeopardizing Hawaii’s tourism-driven economy and risking job losses in businesses dependent on cruise tourism. According to the association, more than 168,000 visitors traveled to Hawaii by cruise ships in the previous year, underscoring the sector’s economic significance.
In addition to the state’s 11% tax, Hawaii’s counties add their own 3% surcharge, bringing the total tax on cruise passengers to 14%. Portions of the revenue collected were slated to be allocated not only to climate initiatives but also to the Economic Development and Revitalization Special Fund, reflecting the state’s dual goals of environmental protection and economic support.
Toni Schwartz, spokesperson for the Hawaii Attorney General’s office, expressed confidence that the tax law, known as Act 96, is lawful and will ultimately be upheld when the appeal is heard on its merits. “We remain confident that Act 96 is lawful and will be vindicated when the appeal is heard on the merits,” Schwartz told The Associated Press.
The legal dispute highlights the tension between environmental policy and economic interests in a state heavily reliant on tourism. While Hawaii has been proactive in addressing climate change impacts, the cruise industry contends that the tax unfairly targets its passengers and could undermine the economic benefits the industry provides.
For more information on the court’s ruling, visit the Ninth Circuit Court of Appeals. Details on Hawaii’s tax laws and climate initiatives can be found through the Hawaii Department of Taxation and the Hawaii Climate Change Mitigation and Adaptation Commission. The economic role of tourism in Hawaii is extensively documented by the Hawaii Tourism Authority.
The injunction represents a significant setback for Hawaii’s efforts to leverage tourism revenues for environmental resilience. The case will continue to unfold as the appeals process advances, with both sides preparing for a decisive legal battle over the future of the state’s climate funding strategy.
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