A US federal appeals court has temporarily stopped Hawaii from enforcing a new cruise passenger tax, delivering a short term win for the cruise industry following a legal challenge led by Cruise Lines International Association.
The Ninth US Circuit Court of Appeals issued an emergency stay late last year, halting the cruise component of Hawaii’s expanded Transient Accommodations Tax just before it was due to come into force.
The tax forms part of the state’s so called Green Fee, designed to fund environmental protection and climate resilience initiatives. While the levy already applies to hotels and short term accommodation, the new legislation would, for the first time, have extended the charge to cruise passengers.
Under the proposal, cruise guests would have been taxed on a pro rata basis for each day their ship was docked in Hawaii, based on the value of their cruise fare. Counties would also have been allowed to impose an additional surcharge.
CLIA filed suit against the state, arguing the tax breaches constitutional protections and federal maritime law, and would unfairly penalise cruise travellers and operators. The association warned the measure could significantly increase the cost of cruising to Hawaii and disrupt itinerary planning.
A lower federal court had previously upheld the legislation, but the appeals court decision pauses enforcement of the cruise tax while the legal challenge continues.
Hawaii officials have defended the legislation and said they remain confident it will ultimately be upheld. However, until the appeal is resolved, cruise passengers will not be charged the additional levy.
The ruling provides temporary certainty for cruise lines selling Hawaii itineraries, although the broader Green Fee remains in place for land based accommodation across the state.
