Hawaii to become first state to charge visitors a climate fee

HONOLULU (CN) — Hawaii made history Tuesday, becoming the first U.S. state to implement a “Green Fee,” which will charge visitors an additional tax to help protect the state’s environment and build resilience against climate disasters.

The policy will increase the state’s transient accommodations tax (TAT) by 0.75%, bringing the total rate to 10%. The fee will apply to hotel stays, short-term rentals, and, for the first time, cruise ship cabins. It is projected to generate approximately $100 million annually beginning in 2026.

“Today Hawaii ushers in the first Green Fee in the nation. Once again, Hawaii is at the forefront of protecting our natural resources, recognizing their fundamental role in sustaining the ecological, cultural and economic health of Hawaii,” Governor Josh Green said at the signing ceremony.

The bill emerged following the 2023 wildfires that decimated Lahaina and many other parts of Maui. In 2024, Governor Green established the Climate Advisory Team, led by Chris Benjamin, to develop community-informed policy recommendations for climate resilience funding.

“The Green Fee bill marks a historic investment in climate disaster resilience and environmental protection,” Benjamin said. “Using the TAT to fund resiliency projects ensures that the financial burden of safeguarding our ʻāina and people doesn’t fall upon residents alone.”

The new fee addresses what supporters say is an equity issue in Hawaii’s tourism industry. By applying the tax to cruise ships — a sector that has long been exempt from the transient accommodations tax — the legislation ensures all visitors contribute to the islands’ environmental protection efforts.

State Senator Lynn DeCoite, who represents District 24 covering parts of Maui and surrounding islands, said the matter is an issue of responsibility.

“I think it’s really about our kuleana, to the state, to the people of Hawaii. Climate change is here and has been a super-huge challenge for all of us,” she said. “The bill shares the responsibility of caring for our home with those who come to visit, to ensure that our natural resources are cared for, for future generations.”

State Representative Adrian Tam of Waikiki’s District 24 praised the diverse coalition that supported the legislation.

“The funds raised by this bill will go toward much-needed environmental stewardship as well as erosion mitigation and restoration projects, so it is really a win-win for all of us,” he said. “The signing of this bill will ensure that the investments in resilience and taking preventive measures will protect Hawaii’s environment and our economy, and it will soon save taxpayer dollars in the long run.”

However, the policy has its skeptics. Members of Hawaii’s tourism industry, the Maui Chamber of Commerce and the Grassroot Institute of Hawaii argued in written testimony that the tax increase would harm residents.

“Support for a TAT increase is often based on the faulty notion that the effect of the tax hike will fall exclusively on tourists. However, the TAT also directly affects Hawaii residents who need to stay in local transient accommodations when traveling interisland or simply seeking to enjoy a ‘staycation,’” the Grassroot Institute said.

The organization also warned that increasing tourism taxes could decrease the number of visitors. They cited research from the Maldives showing that a 10% increase in tourism taxes reduced demand by 5.4%.

Whether the bill will affect Hawaii’s tourism-based economy remains to be seen. The initiative also mirrors climate fees passed by Palau, New Zealand and other tourist-friendly countries in the Pacific.

“As an island chain, Hawaii cannot wait for the next disaster to hit before taking action,” Green said. “We must build resiliency now, and the Green Fee will provide the necessary financing to ensure resources are available for our future.”

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