Hawaii passes lodging tax hike to protect environment from climate threats

Express Tribune

05-05-2025

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Hawaii lawmakers passed landmark legislation on Friday that will increase taxes on short-term tourist accommodations and cruise ships, with revenue directed toward environmental protection and climate resilience.
Governor Josh Green has expressed support for the bill and is expected to sign it into law.
The legislation adds a 0.75% surcharge to the state's current 10.25% lodging tax, which applies to hotel rooms, vacation rentals, and timeshares.
It also introduces a new 11% tax on cruise ship bills, prorated based on the number of days ships spend in Hawaiian ports.
The combined effect will push the total checkout tax rate on lodging to 18.712% – one of the highest in the United States when county and excise taxes are included.
Officials estimate the new taxes will generate nearly \$100 million per year. Funds raised from the surcharge and cruise ship tax will be earmarked exclusively for environmental initiatives.
These include restoring Waikiki beaches, removing fire-prone invasive grasses, and reinforcing homes against hurricanes.
The bill received broad support in the state's Democratic-majority legislature.
Experts say Hawaii is the first U.S. state to implement a tourism tax dedicated to fighting climate change.
'This is about protecting the very reason people come to Hawaii — our natural beauty,' Governor Green said in an interview.
He added that the modest increase was unlikely to deter visitors and could even encourage environmentally conscious travel.
Zane Edleman, a tourist from Chicago said he could envision the extra cost prompting some travelers to head elsewhere else like Florida.
But he said it would depend on how the state shares information about what it does with the money.
'If you really focus on the point — this is to save the climate and actually have proof that this is where the funds are going, and that there's an actual result that's happening from that, I think people could buy into it,' Edleman said.
John Pele, head of the Maui Hotel and Lodging Association, said the goals were worthy but noted rising costs may affect tourism: 'Will we be taxing tourists out of wanting to come here? That remains to be seen.'
The original draft of the legislation proposed a steeper increase but was revised after concerns from the hospitality sector.
Lawmakers say the final version strikes a balance between sustaining tourism and funding environmental action.