Hawaii’s Revolutionary New Tax On Cruise Passengers Faces Fierce Legal Backlash, With Industry Group Arguing It Will Have Catastrophic Effects On State’s Vital Tourism Revenue

Published on August 30, 2025

Hawaii’s recently implemented 14% tourism taxation connected cruise passengers, designed to money ambiance alteration initiatives, is facing a ineligible situation from nan cruise industry. The manufacture argues that nan taxation will importantly summation recreation costs, starring imaginable visitors to reconsider their plans and perchance damaging nan state’s tourism-driven economy. With complete 300,000 cruise visitors annually, nan suit emphasizes nan financial strain nan levy could enforce connected some businesses and section jobs limited connected cruise tourism.

Hawaii Faces Legal Challenge Over Controversial Tourist Tax Aimed astatine Climate Change Solutions

A suit has been revenge successful a Honolulu court, challenging nan constitutionality of Hawaii’s recently introduced tourer tax, which seeks to reside nan state’s increasing climate-related issues. The lawsuit intends to forestall nan rule from being enforced connected cruise vessel passengers, sparking a statement complete nan equilibrium betwixt combating ambiance alteration and preserving nan state’s tourism industry.

In a groundbreaking move, Hawaii Governor Josh Green signed a rule successful May 2025 imposing a first-of-its-kind levy aimed astatine raising costs for addressing nan state’s ambiance crisis. The taxation gross is earmarked for addressing a scope of biology challenges, including rising oversea levels, coastal erosion, and nan increasing threat of wildfires. The authorities estimates that nan taxation will make adjacent to $100 cardinal annually, a important publication to nan state’s ambiance resilience efforts.

However, nan recently enacted rule has faced backlash from nan cruise manufacture and section businesses that trust connected cruise vessel tourism. The authorities raises taxation rates connected edifice room stays and picnic rentals, but it besides introduces an 11% taxation connected nan gross fares paid by cruise vessel passengers. This taxation will beryllium prorated based connected nan number of days nan ships dock successful Hawaii’s ports, which could importantly summation costs for tourists. As an added complication, counties successful Hawaii are allowed to instrumentality an further 3% surcharge, bringing nan full to a hefty 14% taxation connected cruise fares.

The lawsuit, revenge this week successful U.S. District Court successful Honolulu, brings together respective plaintiffs, including a Honolulu-based institution that supplies cruise ships, arsenic good arsenic circuit businesses from Kauai and nan Big Island that dangle heavy connected cruise vessel passengers for their livelihood. These businesses, on pinch nan Hawaii-based Cruise Ship Association, reason that nan taxation would make Hawaii cruises prohibitively expensive, driving visitors to different destinations and causing economical harm to nan state’s cruise industry.

The ineligible situation targets nan authorities taxation officials and region finance departments, claiming nan caller levy connected cruise fares is unconstitutional. The plaintiffs reason that nan taxation would spot an unfair load connected nan cruise manufacture and its passengers, peculiarly erstwhile considering nan broader economical impact. According to nan lawsuit, nan cruise vessel manufacture contributes much than $600 cardinal annually to Hawaii’s economy, drafting astir 300,000 visitors to nan authorities each year. The tax, they claim, could lead to a important driblet successful tourism and occupation losses successful sectors that support nan industry.

One of nan main concerns raised successful nan mobility for a preliminary injunction is nan timing of nan law’s implementation. The plaintiffs reason that because cruise vessel passengers typically book their trips good successful advance, nan impending taxation will origin imaginable travelers to reconsider their picnic plans agelong earlier nan rule takes effect. They pass that families who would person different booked a Hawaii cruise for 2026 whitethorn now take other, much affordable destinations owed to nan recently introduced taxation burden.

The mobility revenge by nan plaintiffs urges nan tribunal to enactment swiftly, seeking an contiguous ruling connected nan law’s cruise-related provisions earlier it tin person a antagonistic effect connected early bookings. A proceeding is scheduled for October 31, 2025, which will find whether nan suit tin proceed and whether immoderate impermanent injunctions will beryllium granted.

The caller rule besides affects different sectors of Hawaii’s tourism economy. In summation to nan taxation connected cruise fares, nan authorities has raised nan existing taxation complaint connected edifice and picnic rental stays. The guidelines complaint for edifice stays has accrued by 0.75%, bringing nan full taxation complaint connected accommodations to 11%. Counties are besides allowed to enforce their ain 3% surcharge connected apical of nan authorities tax, which results successful an wide taxation complaint connected hotels and picnic rentals of astir 19%. The state’s wide excise tax, which applies to equipment and services—including edifice rooms—adds an further 4.712% to nan wide burden.

For Hawaii, tourism is 1 of nan cardinal economical drivers, and galore locals are concerned that this caller taxation could person unintended consequences. While nan costs raised will beryllium directed toward addressing nan state’s increasing biology issues, nan suit emphasizes nan important effect it whitethorn person connected section businesses, peculiarly successful nan cruise vessel sector, which has agelong been a captious root of income for nan islands.

In consequence to nan lawsuit, nan Hawaii Attorney General’s agency declined to supply a comment, noting that they would reappraisal nan lawsuit earlier making immoderate statements. Spokespersons for nan region governments of Honolulu, Maui, and Kauai likewise withheld remark connected nan ongoing litigation, citing nan pending quality of nan ineligible proceedings.

As Hawaii prepares for nan looming tribunal hearing, nan tourism manufacture will beryllium intimately watching nan developments. The result of this lawsuit could person far-reaching implications for nan state’s ambiance policies and its tourism sector, shaping really different regions mightiness attack balancing biology sustainability pinch nan economical value of tourism.