CLIA Sues State of Hawaii Over Cruise Tax

Subscription-based industry newsletter Cruise Week is reporting that the Cruise Lines International Association (CLIA) has filed a suit against the state of Hawaii citing “a blatant violation of the Constitution of the United States.” The lawsuit is in response to the state’s new so-called “Green Fee” that increases the transit accommodation tax (TAT) on hotels, short-term rentals, and cruise ships. (Only Pride of America, which is U.S.-flagged and operates solely within the Hawaiian Islands is exempted from the tax.)

The monies raised will fund climate change initiatives.

According to Cruise Week, this is the first such visitor fee within the U.S. and is expected to raise $100 million annually. (CLIA numbers show that the cruise industry brings about 300,000 annual visitors to the state.)

The suit was filed in the United States District Court of Hawaii and names several entities as defendants: the State of Hawaii, the Hawaii Department of Taxation, the County of Kauai, the City and Council of Honolulu, the County of Maui, and the County of Hawaii.

As reported by Cruise Week, CLIA wrote in its lawsuit: “The unconstitutional law also authorizes Hawai‘i counties to collect additional 3% surcharges, bringing the total imposition to 14% of the prorated fares—adding up to hundreds of millions of dollars in new fees over the next decade on out-of-state cruise lines and, by extension, the out-of-state passengers they bring to the State.”

CLIA stated in the lawsuit that it believes the TAT “violates both the U.S. Constitution and federal law, while imposing an additional financial burden on passengers already subject to substantial fees and taxes.”

The Association also detailed the economic importance of cruise tourism in Hawaii. “Small businesses reap significant benefits from cruise tourism and cruise line shoreside activities, which generated $639 million in total economic impact, including $116 million in tax revenues, and supported 3,000 local jobs and $215 million in wages in 2023, according to an analysis by Tourism Economics/Oxford Economics.”

CLIA argues that extending the TAT to cruise passengers (which have historically been exempted from the fee), “threatens to deter visitors whose spending fuels this economic engine, risking job losses and eroding the financial stability of businesses dependent on tourism.”

CLIA urged “policymakers” to reconsider the newly defined TAT and emphasized that it remains committed to working with the state “to develop a fair and legally sound framework that promotes sustainable economic growth.”