The dispute centers on Hawaii’s new environmental “green fee” — a 0.75-percentage-point increase to the transient accommodations tax that state officials say will generate about $100 million a year to protect the islands from overtourism and climate-related damage. A federal appellate injunction bars state collection of the fee from cruise ships while litigation continues, but Norwegian has decided to collect the tax from passengers regardless, saying it will issue refunds if the industry prevails in court.
Norwegian Cruise Line is collecting Hawaii’s 14 percent transient accommodations tax from passengers on its current Hawaii voyages, even though a federal appellate court blocked state officials from collecting those taxes on cruise ships just hours before they were set to take effect on Jan. 1.
Passengers aboard Norwegian’s Pride of America discovered the charges mid-voyage this week. Don Yonce, a Dallas resident, said an invoice he received during the interisland voyage Sunday included a $1,035 charge in state and county transient accommodations tax, based on the weeklong cost of his family’s cabin suite.
“We were under the impression that the injunction stopped this,” Yonce said Wednesday from aboard the ship.
Guest service managers acknowledged to Yonce and other passengers that the injunction bars the state from collecting the tax. But the managers also told him they “were told by corporate to charge it anyway,” Yonce said. Other passengers were similarly troubled by the charges, he added.
Norwegian’s representatives said the company will refund passengers the tax if the cruise industry ultimately prevails in court.
Other lines stay quiet or hold off
Of the other major cruise lines that call at Hawaii ports, only two responded to requests for comment this week. Oceania Cruises said it does not have the taxes attached to its next Hawaii cruises, scheduled for October. Royal Caribbean referred questions to the Cruise Lines International Association, describing the matter as an industry-wide issue.
The association declined to offer guidance to its member lines. “Decisions about how to handle potential charges during ongoing litigation are individual commercial decisions made by each cruise line,” the association said in a statement.
Hawaii’s green fee and the litigation
The tax at issue is a 0.75-percentage-point surcharge on Hawaii’s transient accommodations tax — the nation’s first environmental “green fee” applied to visitor stays. Hawaii state officials estimate it will generate about $100 million a year to help protect the islands from overtourism, wildfires, and the effects of climate change. Gov. Josh Green has said the cruise industry’s share represents roughly 10 percent of that total.
Federal appellate judges issued the injunction against collecting the fee from cruise ships on Dec. 31, hours before it was set to take effect. The cruise industry’s lawsuit, arguing the tax will substantially increase the cost of Hawaii-bound cruises and harm local businesses that depend on the industry, continues in federal court. A scheduling conference is set for Jan. 26.
Yonce said the company’s handling of the charges will cost Norwegian a repeat customer — not the tax itself.
“I also think that Norwegian is hurting their case,” Yonce said. “They’ve argued in court this (tax) does irreparable harm to their passengers and their suppliers and themselves, but then they’re collecting it anyway, right? You can’t have it both ways.”