A federal appeals court has temporarily blocked Hawaii from implementing a climate change tax on cruise ship passengers. The ruling, issued on New Year’s Eve, halts enforcement of the tax, originally scheduled to begin in 2026.
Legal Challenge and Initial Ruling
Cruise Lines International Association filed a lawsuit challenging the tax, arguing it violates the U.S. Constitution by taxing cruise ships for entering Hawaii ports and would increase cruise costs. U.S. District Judge Jill A. Otake initially upheld the law, prompting an appeal to the 9th U.S. Circuit Court of Appeals.
Tax Details
The law increases taxes on hotel and vacation rentals and imposes an 11% tax on cruise passenger fares, prorated by the length of their stay in Hawaii ports. Counties have the authority to add a 3% surcharge, potentially raising the total tax to 14% of prorated fares. Officials estimated the tax would generate nearly $100 million annually.
The U.S. government also appealed Judge Otake’s ruling, intervening in the case. The 9th Circuit judges granted requests for an injunction pending the outcome of the appeals process.
What’s Next?
The Hawaii attorney general’s office expressed confidence in the law’s legality. According to spokesperson Toni Schwartz, “We remain confident that Act 96 is lawful and will be vindicated when the appeal is heard on the merits.” The injunction temporarily prevents enforcement of the tax on cruise ships while the appeals process continues. A final decision on the tax’s fate is likely to come after the 9th Circuit Court of Appeals hears the case.
The lawsuit specifically targeted the cruise ship provisions of the law. A spokesperson for Cruise Lines International Association indicated they were unable to provide immediate comment due to the timing of the ruling around the holidays.
Frequently Asked Questions
What prompted this legal challenge?
Cruise Lines International Association challenged the tax, arguing it violates the U.S. Constitution and would increase cruise costs.
How much revenue was Hawaii expecting to generate from this tax?
Officials estimated the tax would generate nearly $100 million annually.
Does this ruling affect all parts of the Hawaii tax law?
No, the lawsuit challenged only the law’s provisions related to cruise ships. The tax on hotel room and vacation rental stays remains in effect.
How might this ruling influence future climate-related taxes and fees?
