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Federal lawsuit filed to block tax on visiting cruise ships

Hawaii News Now

Ben Gutierrez

HONOLULU (HawaiiNewsNow) - A consortium of cruise ship operators and tour businesses have filed a lawsuit in federal court to block the state’s new law to tax cruise ships in the same way as hotels.


Cruise Lines International Association, Inc. v. Suganuma contends that Hawaii is blatantly violating the U.S. Constitution by imposing the 11% tax on out-of-state cruise passengers in January, and letting the counties add an extra 3%.


It’s the first time cruise ships would have to pay the transient accommodations tax charged to guests at hotels and vacation rentals.


“Here you have a floating hotel, right? You have a floating hotel,” said state Sen. Lynn DeCoite, who chairs the Senate Economic Development and Tourism Committee. “The hotel industry has paid their fair sure for the past years.”


The group that filed the lawsuit wouldn’t do an interview. But the lawsuit claims that “As the Supreme Court long has recognized, the Constitution’s Tonnage Clause bars States from imposing any “charge for the privilege of entering, trading in, or lying in a port.”


The complaint also said, “For an average family, Act 96 will add hundreds of dollars to the cost of popular cruise itineraries that dock in Hawaii ports. That substantial price increase will cause many families to forego trips to Hawaii in favor of other destinations.”


“‘It’s going to hurt the industry and people are not going to come.’ Well then find me a tourist on your ship that is going to publicly say that. Say it publicly. If that’s the case, then this is not the place for you,” DeCoite said.


Last year, the state said more than 150,000 out-of-state cruise line passengers came to Hawaii.


“One of the challenges is because they don’t pay any tax when they come to port, yet they still have stress on the infrastructure,” said Jerry Agrusa, a professor with the University of Hawaii School of Travel Industry Management.


The new tax also includes a .75% “Green Fee” to fund projects that help the environment.


“I spoke with a lot of tourists this weekend while I was sitting there playing tourist myself and I didn’t hear anybody complain about it,” DeCoite said. “I brought up the Green Fee just like that, and they’re like, we don’t mind.”


The state Department of the Attorney General said it was just served with the complaint and won’t comment until they have a chance to review it.

August 28, 2025

Senators Mentioned:

Senator Lynn DeCoite

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