By Audrey McAvoy
HONOLULU (AP) — The Hawaii governor was signed Tuesday to raise funds to increase taxes on hotel rooms and vacation rental stays and to address the outcomes of erosion coastlines, wildfires and other climate change.
The signature comes almost two years after the Maui wildfire killed 102 people and wiped out almost everything in Lahaina town, but marks the country’s first such levy to deal with the warming planet.
Officials estimate that taxes will generate around $100 million a year. The money is used in projects like replenishing sand eroding Waikiki beaches, promoting the use of hurricane clips to secure roofs during powerful storms, and cleaning up flammable invasive grasses like those fueled the wildfires of Lahaina.
Speaking at the bill’s signing ceremony, Gov. Josh Green said Hawaii would need to launch more fires and pay the fire service.
Green said other states and countries need to act similarly.
“There is no way to deal with these crises without a positive mechanism,” Green said.
This measure adds 0.75% to the indoor rate tax from January 1st to the 1st. Green said this would amount to an additional $3 tax on the $400 hotel room rate.
We will also collect a new 11% tax on cruise ship invoices starting in July 2026. This is the number of days the ship is in Hawaii Port and will bring taxes on the cruise ship along the cabin tax on the land.
Travelers to Hawaii already pay a significant room tax. The new law will raise taxes on the state’s existing 10.25% short-term accommodation to 11%. Along with other state and county taxes, visitors will pay close to 19% of the collection on the accommodation. This is one of the highest tax rates in the country.
The Hawaii hotel ultimately supported the bill, saying it would help improve the visitor’s experience. Green said the industry is considering tourism, Hawaii and the “big better” of the planet.
Green initially proposed a bill to include revenue from tax increases in a dedicated fund, but instead lawmakers put money in the state’s general fund. Their compromise action calls for the governor to request funding from Congress for projects in the next sector. Increases climate resilience; mitigates the impact of tourism on the environment. Green said he would cooperate in enforcing the law.
Rep. Adrian Tam, chairman of the House Tourism Committee, said the state must gain public confidence in spending money transparently in the best possible way. He said Hawaii’s tourism economy relies on brands that rely in part on primitive natural environments.
“If we don’t take action now, the visitor industry will be struggling,” said Tam, a Democrat representing Waikiki. “If our beaches are thinned out, there’s nothing left for them to display in other parts of the world. Wildfires take over our town and hiking is uncontrolled.”
Original issue: May 28, 2025, 3:37pm EDT
