HONOLULU (HawaiiNewsNow) -After clearing legal hurdles, a new state law imposing higher taxes for tourists is on track to go into effect in the new year.
The Green Fee will increase the transient accommodation tax (TAT) for visitors by 0.75%, raising it to 11%. Counties can also tack on a 3% surcharge.
For the first time, the new rule will also require cruise ship passengers to pay the TAT, in addition to visitors staying in hotel rooms and short-term rentals.
On Tuesday, Hawaii Attorney General Anne Lopez announced a federal judge dismissed most of the lawsuits filed against the Green Fee.
The fee is expected to generate $100 million a year to fund climate change efforts, from combating erosion to protecting against wildfires.
Supporters defend new tax
Mufi Hannemann of the Hawaii Lodging & Tourism Association defended the increased taxes, saying, “Obviously, they didn’t want to see this. They saw this as something that was an infringement on their rights and protections, if you will.”
“At the end of the day, a visitor is a visitor whether they come here by ship, by air,” Hannemann added.
State Rep. Adrian Tam said the fee supports Hawaii’s environmental brand.
“Part of Hawaii’s brand is our environment, and we’re only able to maintain this brand so that visitors will continue to come,” Tam said.
Lopez shared in a press release that “while the litigation is not over, we are confident in the legality of this law and will continue to vigorously defend it on behalf of the people of Hawaii.”
Critics challenge constitutionality
Cruise Lines International Association (CLIA), with the support of the Trump administration, argues the fee is unconstitutional.
“This case involves important questions about how federal and state laws interact in regulating maritime commerce—principles rooted in long-standing constitutional safeguards that protect free and open ports nationwide,” association spokesperson Jim McCarthy said in a written statement to Hawaii News Now.
McCarthy added, “On behalf of its member cruise lines, CLIA will continue to pursue this matter constructively through the courts while working with Hawaii to support local communities and sustainable tourism.”
“Cruise tourism generates nearly $1 billion in total economic impact for Hawaii and supports thousands of local jobs,” McCarthy said. “We remain focused on ensuring that success continues on a lawful, sustainable foundation.”
The suit included Honolulu Ship Supply Co., which supplies cruises docked on Oahu, Kauai, and Hawaii Island.
Company CEO Maxime Aymonod responded to the claim’s dismissal.
“We are disappointed. While the court has issued its ruling, the litigation is going to continue,” said Aymonod. “In the meantime, the harms our business will suffer are real and imminent, and this decision does not change that reality.”
“It’s Christmas Eve, and this is not good news for the thousands of people whose livelihoods depend partly or entirely on the cruise industry,” said Aymonod.
“When the economy suffers, everyone in our community is negatively impacted,” said Aymonod. “We hope our fellow citizens and voters will stand with us in spirit and in the voting booth.”
Passengers Kevin and Lorraine Barry of New York, who arrived at Honolulu Harbor via the Seabourn cruise line, criticized the new law.
“Just a negative sales pitch. It’s a deterrent. It certainly is a deterrent,” the couple shared. “We’ve been to Hawaii several times before, and I think that it would impact it, and overall, I think it’s just a negative on the tourism.”
The Green Fee will take effect Jan. 1, meaning visitors to Hawaii will begin paying the higher tax rate in about one week.
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