BREAKING: A federal appeals court has just blocked Hawaii from implementing a groundbreaking climate change tourist tax on cruise ship passengers. The ruling, issued on New Year’s Eve, halts enforcement of the tax, which was scheduled to take effect at the start of 2026.
The Cruise Lines International Association (CLIA) successfully challenged the tax in a lawsuit, claiming it violates the U.S. Constitution by imposing fees on cruise ships entering Hawaii’s ports. The tax would have added an additional 3% surcharge, raising the total tax burden to 14% of prorated fares, significantly increasing costs for travelers.
Hawaii’s legislation, signed by Governor Josh Green in May, aimed to generate nearly $100 million annually to address urgent climate issues like eroding shorelines and wildfires. Officials viewed this as a vital step in the nation’s first such initiative to combat climate change.
The tax would not only affect cruise ship passengers but also increase rates on hotel stays and vacation rentals, amplifying the financial impact on tourists. The law allowed counties to collect taxes based on the number of days vessels spend in Hawaii ports, which could have further complicated travel expenses for visitors.
In a recent decision, U.S. District Judge Jill A. Otake upheld the law, but the 9th U.S. Circuit Court of Appeals intervened following an appeal from both the plaintiffs and the federal government. The appeals court granted an injunction, temporarily blocking the tax from being enforced while legal proceedings continue.
Toni Schwartz, spokesperson for the Hawaii attorney general’s office, expressed confidence in the law’s legality, stating, “We remain confident that Act 96 is lawful and will be vindicated when the appeal is heard on the merits.”
The lawsuit specifically targeted the cruise ship provisions, leaving other aspects of the law in question. CLIA spokesperson Jim McCarthy indicated uncertainty about obtaining comments from the plaintiffs due to the timing of the ruling coinciding with the holiday season.
As the appeals process unfolds, the impact on Hawaii’s economy and its efforts to combat climate change remains uncertain. Tourists and industry stakeholders are left in limbo as the state navigates this legal challenge.
WHAT’S NEXT: Observers will be closely monitoring the next steps in this legal battle, as the outcome could reshape Hawaii’s approach to climate taxation and tourism in the coming years. Stay tuned for further updates on this developing story.
