Hotel, cruise ship tax hike aims to reduce wildfire, climate risk
Tourists would collectively pay millions of dollars more each year to stay in Hawaii hotels and on cruise ships to help the state address climate change and reduce the risk of future wildfires under a bill approved Tuesday by the full House.
The latest version of Senate Bill 1396 offers no specific recommendation for how much Hawaii's transient accommodations tax would raise, an issue that likely will be resolved in a joint House-Senate conference committee in the final days of the legislative session before its scheduled adjournment May 2.
But each 1 % increase in the room tax for hotel nights has been projected to generate another $80 million annually, with another $24 million coming from passenger stays aboard cruise ships.
On Tuesday the full Senate also approved its amendments to the latest version of House Bill 504 that would charge ship passengers a monthly tax of $20 per passenger per port entry for 'environmental stewardship.'
Both the increased TAT and monthly ship tax would begin on Jan. 1, 2027.
Gov. Josh Green previously told the Honolulu Star-Advertiser that increasing the TAT another 1 % would cost tourists an additional $5 to $8 per night.
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Local residents also would have to pay for a higher TAT for staying on another island.
But Green has said they would pay only an additional $6 per night for what he called a typical $300 kama aina room rate.
Green had proposed using all of the $60 million or so in annual interest on the state's billion-dollar rainy day fund to address climate change.
But companion bills to dedicate the interest on the rainy day fund—HB 1076 and SB 1395—have failed this legislative session.
In written testimony this month, the governor's office said it recommends increasing the TAT by 1 %—or to 11.25 % from 10.25 %.
The increase would generate $90 million in additional revenue for fiscal year 2027, which would rise to $100 million for fiscal year 2030, Green's office said.
He proposed that 40 % of the revenue go to 'environmental stewardship, 40 % to climate and hazard mitigation, and 20 % to sustainable tourism.'
Various ideas to pay for climate change have been proposed in the past three legislative sessions, with some of them considered unconstitutional for imposing different laws on local residents compared with visitors from other U.S. states.
Other climate change funding bills that died this session included House and Senate companion bills HB 1139 and SB 1458.
They would have allowed the state Department of Land and Natural Resources to charge a fee for a visitor 'environmental stewardship license ' that would have funded nonprofit organizations to protect, restore and manage Hawaii's and cultural resources.
Green originally proposed raising tourism fees to pay for climate change and reduce the risk of wildfires three years ago in his first year in office.
The concept generated several ideas that all died.
But reducing the risk of future wildfires took on more urgency in 2024 in the aftermath of the Aug. 8, 2023, Maui wildfires, which killed 102 people and decimated Lahaina, leading to a proposed $4 billion settlement to be paid by defendants including the state, Maui County and Hawaiian Electric.
Green has said reducing Hawaii's risk of future wildfires also will lower insurance rates.
The debate over whether to pay for climate change by increasing the hotel tax played out Tuesday on the House floor.
In each of the past three legislative sessions, Hawaii's tourism industry has pushed back against increasing the cost to visit Hawaii.
State Rep. Garner Shimizu (R, Moanalua-Aliamanu-Foster Village ) told his House colleagues that he fears Hawaii may be 'reaching a breaking point in our price point ' that could lead tourists to visit someplace else.
But, like others, Rep. Adrian Tam (D, Waikiki )—chair of the House Tourism Committee—said the state needs to protect 'Hawaii's natural beauty ' for future generations and to ensure its reputation as a desirable tourist destination.
Rep. Darius Kila (D, Nanakuli-Mail ) called charging cruise ship passengers to also pay for climate change 'the most smartest thing we have ever done.'
Kila, who chairs the House Transportation Committee, said cruise ship passengers also affect Hawaii's ecosystem by using roads, trails and other natural features.
If SB 1396 clears the Legislature and becomes law, DLNR would use the additional revenue for the 'protection, management, and restoration of the State's natural resources as well as for environmental stewardship, climate and hazard mitigation, and sustainable tourism, ' according to the bill.
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