Should cruise ship cabins be taxed in the same way as hotel rooms and vacation rentals?
That’s what one popular tourist destination is proposing in a new plan that would make cruise passengers pay significantly more to enjoy a cruise vacation around the scenic state.
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Lawmakers have advanced two pieces of legislation that would raise costs for cruise ship passengers. One bill proposes a $20 per-passenger fee for each port entry while the other would potentially apply an 11% tax on cruise ship cabins, treating them in the same way as hotel rooms and vacation rentals.
Negotiations between the state’s House and Senate will determine just how much more cruise passengers could pay. Revenue from the tax would support the state’s natural resource conservation and sustainable tourism initiatives.
The popular tourist destination is sought after for its natural beauty, but it’s already expensive to visit. If costs go up, many travelers who have the vacation spot on their bucket list could be priced out.
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Hawaii wants cruise industry to pay their ‘fair share’ in tourism taxes
As Hawaii seeks to protect its natural beauty from the effects of tourism, lawmakers say cruise lines need to be treated the same as hotels and any other businesses in the tourism industry, as reported by Hawaii News Now.
Norwegian Cruise Line, however, says its Pride of America ship, which sails year-round from Honolulu as the only U.S.-flagged cruise ship, can’t be treated like a hotel. Maritime law contained in the U.S. Constitution doesn’t allow additional taxes to be applied beyond the cost of providing port services.
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“It’s simply unconstitutional. It’s black and white,” Norwegian Cruise Line General Counsel Daniel Farkas told Hawaii News Now. “It has to do with uniformity as to when a vessel pulls into port. It’s simply so that everyone is treated equally.”
Lawmakers argue that cruise ships and hotels should be treated equally.
“The Supreme Court also made a very clear that we cannot give preferential treatment,” State Rep. Adrian Tam said. “All we’re asking for them is to pay their fair share. It should be a no-brainer. They are benefiting from Hawaii’s natural beauty.”
Norwegian Cruise Line warns that cruise lines could drop Hawaii
The cruise industry is threatening to take legal action against Hawaii if either of the tax proposals become law.
Farkas said that Pride of America passengers already pay about $100 in port fees and taxes during a five-day inter-island cruise. The proposed taxes could double that.
“What that means is for a family of five, such as mine, that’s an extra $500 to the price of a ticket,” Farkas said. “and it is going to make very, very quickly the cost of a cruise simply unaffordable.”
Farkas also warned that the cruise industry could abandon Hawaii for other cruise destinations in the face of higher fees.
“It picks up and moves. It’s got propellers, it’s got rudders, and we can move it wherever we want,” he said.
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Should the new tax plans move forward, cruise passengers sailing in Hawaii could see higher fees beginning at the start of 2027.
While Norwegian Cruise Line’s Pride of America is the only cruise ship that offer cruises exclusively around the Hawaiian Islands roundtrip from Honolulu, most other major cruise lines currently offer Hawaii cruises.
On other ships, Hawaii cruises typically depart from California, Seattle or Vancouver. If their sailings start and end in a U.S. port, these foreign-flagged ships must make a stop in a foreign port of call, according to U.S. maritime law.
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