By MARCEL HONORE/Honolulu Civil Beat
At least one cruise line has started charging its passengers Hawaiʻi’s tax on visitor stays and the new, landmark environmental “green fee” that goes with it, even though a court order currently bars local tax officials from collecting those dollars on cruise stays.
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That decision by Norwegian Cruise Lines comes as the cruise industry simultaneously tries to overturn in court the parts of Hawaiʻi’s new green fee law that require ships to pay the same transient accommodations tax as hotel and vacation rental owners. Federal appellate judges issued the injunction against the tax collections on cruise ships on New Year’s Eve, hours before they were to take effect.
Norwegian representatives say the company will refund its passengers if the industry ultimately prevails in court.
It’s not clear whether any of the other cruise lines that visit the islands are similarly charging their passengers the tax amid the court injunction, or if the cruise industry’s main trade group is offering guidance on how to handle the situation. Only two of the other major lines that stop in the islands’ ports responded this week to requests for comment.
Oceania Cruises said it doesn’t have the taxes attached to its next Hawaiʻi cruises, which will happen in October. A Royal Caribbean spokesperson referred questions on whether the company was charging passengers to the Cruise Line Industry Association, saying the matter was an industrywide issue.
However, the association took a different view.
“Decisions about how to handle potential charges during ongoing litigation are individual commercial decisions made by each cruise line,” a statement from the association said,
Mid-Cruise Sticker Shock
Dallas resident Don Yonce, who’s currently aboard Norwegian’s latest Hawaiʻi cruise, said the company first notified him via email in October that his cruise would tack on Hawaiʻi’s 14% state and county transient accommodations taxes, or TAT, for any time spent in port.
That email estimated Yonce would be charged $1,035 in TAT, based on the weeklong cost of his family’s cabin suite. Still, he was surprised to get an invoice during the interisland voyage Sunday that included that charge.
“We were under the impression that the injunction stopped this,” Yonce said Wednesday from Norwegian’s Pride of America. Guest service managers aboard the ship acknowledged to him and other passengers that the injunction stopped the state from collecting the tax, Yonce said, but they also told him they “were told by corporate to charge it anyway.”
The other passengers, he added, were similarly irked at seeing the extra charges.
In its lawsuit, the association representing Norwegian and other lines says the TAT will substantially increase the costs of Hawaiʻi-bound cruises, harming not just the cruise operators but also the local businesses that depend on the industry.
“I also think that Norwegian is hurting their case.” Yonce said Wednesday. “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.”
Hawaiʻi state officials estimate the recent 0.75 percentage point increase to the transient accommodations tax, which created the nation’s first-ever green fee, will generate around $100 million a year to help shield Hawaiʻi’s environment from overtourism, wildfires and other natural disasters, and the growing impacts of climate change.
The cruise industry’s portion, Gov. Josh Green has said, represents about 10% of those green fee dollars.
The association’s lawsuit continues to play out in federal court. The next hearing, a scheduling conference, is slated for Jan. 26.
Yonce said this will likely be his family’s last cruise on Norwegian not because of the tax itself but rather how the company is handling the tax.
This story was originally published by Honolulu Civil Beat and distributed through a partnership with The Associated Press.
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