Cruises to a beloved destination are about to get more expensive
The cruise industry has threatened to take legal action in response to this new cruise tax.
In a move to protect its natural beauty, a popular tourist destination has passed new legislation that will hike its lodging tax rate and introduce a new tax on cruise ships.
Revenue from the new tourism tax will fund vital climate change mitigation and sustainability projects, but will add significant extra fees for cruise travelers. This bucket-list cruise destination is already expensive to visit, and the additional costs could price some travelers out of cruises through the scenic state.
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Under the new tax policy, cruises will be subject to the state’s transient accommodations tax for the first time, and at a rate of 11%. The bill also increases the current tax on short-term lodging by 0.75%. So while it doesn’t represent a huge tax increase for hotel guests, it does impose a significant new fee on cruise passengers.
Passed by the state’s legislature on May 2, the bill is expected to be signed into law by the governor and take effect Jan. 1, 2026.
The cruise industry, however, has already threatened legal action against the state if the tax bill becomes law.
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Cruise industry could enter legal battle with Hawaii over new tax
Through a new tax on cruises visiting Hawaii, lawmakers seek to treat cruise ships the same as hotel and lodging establishments in the state. However, the cruise industry says cruise ships can’t legally be treated like hotels.
Attorneys for the cruise industry have already sent a letter to Hawaii’s attorney general and lawmakers to let them know to expect a lawsuit if the state’s cruise tax proposal becomes law, according to Hawaii News Now.
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Norwegian Cruise Line General Counsel Daniel Farkas has said that the new cruise tax is “simply unconstitutional,” pointing out that maritime law contained in the U.S. Constitution doesn’t allow additional taxes to be applied on cruise ships beyond the cost of providing port services.
Farkas also cautioned that if the cost of sailing in Hawaii rises, the cruise industry could choose to sail away, swapping Hawaii for other cruise destinations.
“It picks up and moves. It’s got propellers, it’s got rudders, and we can move it wherever we want,” he said.
Pride of America cruises to be most impacted by new Hawaii cruise tax
As the only U.S.-flagged cruise ship, Norwegian Cruise Line’s Pride of America is the only cruise ship that sails exclusively in Hawaii. The ship sails Hawaii inter-island cruises year-round from Honolulu.
Pride of America passengers already pay more than $250 per person in taxes, fees and port expenses during a seven-day Hawaii inter-island cruise, and the new Hawaii cruise tax would increase that considerably.
The new tax plan would add an 11% tax on cruise fares prorated by the percentage of days docked at any port in the state, in comparison to the total number of days of the voyage.
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For Pride of America cruises, which sail exclusively around the Hawaiian islands, that basically means an 11% tax on the entire base cruise fare for the voyage. Hawaii cruises on other ships, which typically depart from California, Seattle or Vancouver, would only be taxed on the days docked in a Hawaiian port.
The bill states that the tax will be charged as a percentage of the base cruise fare, and would not apply to optional add-on charges like shore excursions and specialty dining.
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