Federal Court Halts Hawaii’s $100M Climate Change Cruise Tax
In a dramatic New Year’s Eve decision, a federal appeals court temporarily blocked Hawaii from implementing an 11% climate change tax on cruise ship passengers. This tax was set to take effect on January 1, 2026. The ruling provides immediate relief to cruise travelers and operators who were bracing for significant fare increases.
The Cruise Lines International Association challenged the tax, arguing it violates the U.S. Constitution by taxing cruise ships for entering Hawaii ports and interferes with interstate commerce. The levy would have imposed an 11% tax on gross cruise fares, with counties authorized to add an additional 3% surcharge, bringing the total to 14% of prorated fares. Officials had estimated the tax would generate nearly $100 million annually to fund climate resilience projects including:
- Beach erosion prevention
- Wildfire mitigation
- Coral reef protection
The 9th U.S. Circuit Court of Appeals granted an injunction pending full appeal, temporarily halting enforcement of the cruise ship provisions while allowing hotel and vacation rental tax increases to proceed. The U.S. government intervened in the case, supporting the cruise industry’s challenge. Hawaii’s Attorney General’s office said it remains confident the law will be upheld on appeal.
Source: CBS News