Hawaii Cruise Tax Temporarily Blocked by Appeals Court

A U.S. federal appeals court has blocked Hawaii’s 11% cruise tax just a day before it was set to take effect.

The decision represents a win – at least temporarily – for CLIA and its cruise line members. The association initiated a lawsuit against the state and its new legislation last August.

The new tax would be applied to cruise passengers for each day their cruise ship is in Hawaiian waters and allow local governments to add an additional 3% surcharge if they choose. If eventually implemented, the tax is expected to raise about US$100 million annually.

The tax was set to take effect January 1, following a District Courts decision clearing the way for the tax to be imposed. The appeals court says it has not yet made a final decision on the tax, but it will not be imposed until it does so.

CLIA’s position is supported by the U.S. federal government, which joined the lawsuit last fall, stating that the tax “preys upon American businesses and tourists.” Money from the tax – which is an expansion of the state’s accommodation tax, was intended to go toward environmental protection and sustainability initiatives.

CLIA says cruise tourism generates nearly $1 billion in total economic impact for Hawaii, supporting thousands of local jobs. 

“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,” CLIA said in a statement. 

“On behalf of its member cruise lines, CLIA will continue to pursue this matter constructively through the courts while working with Hawai‘i to support local communities and sustainable tourism.”