Key Takeaways
- A federal appeals court has blocked Hawaii from enforcing a climate change tourist tax on cruise ship passengers, which was set to take effect in 2026.
- The tax would have imposed an 11% levy on gross fares paid by cruise ship passengers, with an additional 3% surcharge allowed for counties.
- The Cruise Lines International Association challenged the tax, arguing it violates the U.S. Constitution and would make cruises more expensive.
- The tax was expected to generate nearly $100 million annually to help Hawaii deal with climate-related issues such as eroding shorelines and wildfires.
- The appeals court’s ruling temporarily halts enforcement of the law on cruise ships while the appeals process moves forward.
Introduction to the Climate Change Tourist Tax
The state of Hawaii has been at the forefront of addressing climate change, and in May, Governor Josh Green signed legislation that aimed to raise tax revenue to deal with the impacts of a warming planet. The law, which was set to take effect in 2026, imposed a new tax on cruise ship passengers, as well as increased rates on hotel room and vacation rental stays. The tax was expected to generate nearly $100 million annually, which would be used to help Hawaii cope with eroding shorelines, wildfires, and other climate-related problems.
The Lawsuit and Appeal
However, the Cruise Lines International Association challenged the tax in a lawsuit, arguing that it violates the U.S. Constitution by taxing cruise ships for entering Hawaii ports. The association also argued that the tax would make cruises more expensive, which could have a negative impact on the tourism industry. The lawsuit specifically challenged the law’s cruise ship provisions, which imposed an 11% tax on the gross fares paid by cruise ship passengers, prorated for the number of days the vessels are in Hawaii ports. Additionally, the law allowed counties to collect an additional 3% surcharge, bringing the total tax to 14% of prorated fares.
The Court’s Ruling
U.S. District Judge Jill A. Otake initially upheld the law, but the plaintiffs appealed to the 9th U.S. Circuit Court of Appeals. The U.S. government also intervened in the case and appealed Otake’s ruling. In a ruling on New Year’s Eve, two 9th Circuit judges granted both requests for an injunction pending the appeals, effectively blocking Hawaii from enforcing the climate change tourist tax on cruise ship passengers. The order temporarily halts enforcement of the law on cruise ships while the appeals process moves forward.
Reaction to the Ruling
The Hawaii attorney general’s office expressed confidence that the law would be vindicated when the appeal is heard on the merits. "We remain confident that Act 96 is lawful and will be vindicated when the appeal is heard on the merits," said Toni Schwartz, spokesperson for the Hawaii attorney general’s office. The Cruise Lines International Association also welcomed the ruling, with spokesperson Jim McCarthy stating that he was pleased with the court’s decision. However, McCarthy noted that he was unsure if he could get comment from the plaintiffs given the timing of the ruling before a holiday.
Implications of the Ruling
The ruling has significant implications for Hawaii’s efforts to address climate change. The tax was expected to generate significant revenue for the state, which would have been used to fund initiatives to mitigate the impacts of climate change. The temporary halt on enforcement of the law means that Hawaii will have to explore alternative sources of funding for these initiatives. The ruling also has implications for the tourism industry, which is a significant contributor to Hawaii’s economy. The tax would have increased the cost of cruises, which could have had a negative impact on the industry.
Conclusion
In conclusion, the federal appeals court’s ruling has blocked Hawaii from enforcing a climate change tourist tax on cruise ship passengers. The tax was aimed at generating revenue to help the state deal with climate-related issues, but the Cruise Lines International Association challenged it, arguing that it violates the U.S. Constitution. The ruling has significant implications for Hawaii’s efforts to address climate change and the tourism industry. The appeals process is ongoing, and it remains to be seen whether the law will be upheld or struck down. Regardless of the outcome, the ruling highlights the challenges of addressing climate change and the need for innovative solutions that balance the needs of the environment, the economy, and the community.