Hawaii's governor signs new hotel tax legislation to help cope with climate change

Hawaii's governor signed legislation Tuesday that boosts a tax imposed on hotel room and vacation rental stays in order to raise money to address eroding shorelines, wildfires and other consequences of climate change.

The signing, which comes nearly two years after a Maui wildfire killed 102 people and wiped out almost all of Lahaina town, marks the nation's first such levy to help cope with a warming planet.

Officials estimate the tax will generate nearly $100 million annually. The money will be used for projects like replenishing sand on eroding Waikiki beaches, promoting the use of hurricane clips to secure roofs during powerful storms and clearing flammable invasive grasses like those that fueled Lahaina's wildfire.

Governor Josh Green, speaking at a bill signing ceremony, said Hawaii needs to build more firebreaks and pay a fire marshal, a new position created after Lahaina that Green expects to be staffed within the next two months.

Green said other states and nations will need to act similarly to address climate disasters roiling the planet.

"There will be no way to deal with these crises without some forward-thinking mechanism," Green said.

The measure adds an additional 0.75 per cent to the daily room rate tax starting January 1. Green said this amounts to an extra $3 tax on a $400 hotel room rate.

It also levies a new 11 per cent tax on cruise ship bills starting July 2026, prorated for the number of days the vessels are in Hawaii ports, to bring cruise ship taxes in line with room taxes on land.

Travellers to Hawaii already pay a significant room tax. With the new law, the state's existing 10.25 per cent tax on short-term accommodations will climb to 11 per cent. Together with other state and county taxes, visitors will pay a nearly 19 per cent levy on their accommodations - one of the highest rates in the country.

Hawaii's hotels ultimately supported the bill, saying it would help improve the visitor experience. Green said the industry looked at "the greater good" for tourism, Hawaii and the planet.

Green initially proposed a bill that would put revenue from the tax increase into a dedicated fund, but lawmakers instead put the money into the state's general fund. Their compromise measure calls on the governor to request funds from the Legislature for projects in the following areas: protecting native forests, plants and animals; enhancing climate resilience; and mitigating the effects of tourism on the environment. Green said they will collaborate to implement the law.

State Representative Adrian Tam, the chairperson of the House tourism committee, said the state must earn the public's trust that it will spend the money transparently and in the best way possible. He noted Hawaii's tourism economy relies on a brand that's in part dependent on a pristine natural environment.

"The visitor industry will struggle if we do not take action now," said Tam, a Democrat representing Waikiki. "There will be nothing left for them to showcase to the rest of the world if our beaches are decimated, wildfires have taken over our towns and hikes left unmanaged."