Federal appeals court blocks Hawaii’s climate change tourist tax on cruise ships

A recent federal appeals court ruling has put a halt to Hawaii’s plans to enforce a climate change tourist tax on cruise ship passengers starting in 2026. The tax, which was set to go into effect at the beginning of the year, faced opposition from Cruise Lines International Association, who argued that it violated the U.S. Constitution and would ultimately increase the cost of cruises for passengers.

The tax, which would have increased rates on hotel stays and vacation rentals, also included an 11% tax on the gross fares paid by cruise ship passengers, prorated for the number of days the ships spent in Hawaii ports. Counties were also authorized to collect an additional 3% surcharge, bringing the total tax to 14% of prorated fares. The revenue generated from this tax was estimated to be nearly $100 million annually and was intended to help address climate-related issues such as eroding shorelines and wildfires.

Despite a U.S. District Judge upholding the law, the plaintiffs appealed the decision to the 9th U.S. Circuit Court of Appeals, with the U.S. government also intervening in the case. The appeals court judges granted an injunction pending the appeals process, temporarily halting the enforcement of the tax on cruise ships while the case moves forward.

Hawaii’s attorney general’s office remains confident in the legality of the tax and believes it will be vindicated when the appeal is heard on its merits. The lawsuit specifically targeted the cruise ship provisions of the law, leaving other aspects of the tax unaffected.

A spokesperson for Cruise Lines International Association expressed uncertainty about obtaining a comment from the plaintiffs in light of the timing of the ruling before a holiday. The future of the climate change tourist tax in Hawaii remains uncertain as the legal battle continues to unfold.