CLIA Sues Hawaii Over New Cruise Tax

The Cruise Lines International Association (CLIA) has filed a lawsuit against the State of Hawaii, alleging “a blatant violation of the United States Constitution.” The legal action challenges the state’s new “Green Fee”, an increase in the Transient Accommodations Tax (TAT) applied to hotels, short-term rentals, and cruise ships. The only exemption is for Norwegian Cruise Line’s Pride of America, the sole U.S.-flagged vessel operating exclusively within the Hawaiian Islands.

Revenue from the tax is earmarked for climate change initiatives. State officials estimate it could generate $100 million annually. CLIA stresses that the cruise industry contributes about 300,000 visitors each year to the archipelago.

The lawsuit, filed in the U.S. District Court for Hawaii, names as defendants the State of Hawaii, the Department of Taxation, the County of Kauai, the City and County of Honolulu, the County of Maui, and Hawaii County.

According to the filing, the law also authorizes counties to impose an additional 3% surcharge, raising the total tax burden to 14% of prorated cruise fares. CLIA argues this would amount to hundreds of millions of dollars in new taxes over the next decade for foreign-flagged cruise lines and, ultimately, for passengers traveling from outside the state.

The association contends that the measure violates both the Constitution and federal law, while imposing a new financial burden on cruise passengers, who already face significant fees and charges. CLIA also emphasized the importance of cruise tourism to the local economy: in 2023, the sector generated $639 million in economic impact, including $116 million in taxes, support for 3,000 local jobs, and $215 million in wages, according to a study by Tourism Economics/Oxford Economics.

CLIA warned that extending the TAT to cruise passengers — historically exempt — could discourage tourism, jeopardizing jobs and the financial stability of businesses dependent on the sector. The association urged lawmakers to reconsider the measure and reiterated its willingness to work toward a “fair and legally sound framework that supports sustainable economic growth.”