SB 2698: DOT; TAT; Cruise Ships; Passenger Head Fee; Cruise Ship Special Fund; Appropriation

A BILL FOR AN ACT

RELATING TO TRANSPORTATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 266, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

     "§266-A  Cruise ships; passenger head fee.  (a)  The department of transportation shall assess a fee of $     per passenger against any cruise ship that docks in any commercial harbor in the State.  The fee shall be assessed at each port entry and shall be assessed in addition to existing port user fees pursuant to this chapter and set forth in rules adopted by the department of transportation pursuant to chapter 91, including port entry, dockage, and passenger fees.

     (b)  All fees collected pursuant to this section shall be deposited into the cruise ship special fund established pursuant to section 266-B.

     (c)  For the purposes of this section:

     "Cruise ship" means any ship that docks at any commercial harbor in the State that charges a fee for and provides cruise ship cabins to passengers.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to a passenger.

     §266-B  Cruise ship special fund; established.  (a)  There is established in the state treasury the cruise ship special fund, into which shall be deposited:

     (1)  All revenues from any fees collected pursuant to section 266-A;

     (2)  All contributions from public or private partners; and

     (3)  All interest earned on or accrued to moneys deposited in the special fund.

     (b)  Moneys in the cruise ship special fund shall be used solely for port facility and capital improvement projects to support cruise ship operations as authorized by the director of transportation."

     SECTION 2.  Section 37-79, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§37-79[]]  Climate change and tourism destination management; projects; budget request.  The governor shall request, in the budget or the supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, that an amount of general funds that approximates the additional revenue generated by any increase to the transient accommodations tax rates pursuant to section 237D-2(a)(6) and (c)(4) beginning on January 1, 2026, and section 237D-2(e) beginning on July 1, 2026, [and by assessment of the transient accommodations tax on gross rental proceeds derived from cruise fares pursuant to section 237D-2(a)] be expended equally to advance specific projects to:

     (1)  Protect, manage, and restore the State's natural resources, including native forests, native plants and animals, aquatic resources, coastal lands, and freshwater resources;

     (2)  Increase the resilience of structures and infrastructure to natural and climate-related disasters, such as hurricanes and sea level rise, and perform hazard mitigation activities, such as wildfire and flood mitigation; and

     (3)  Improve the visitor experience, mitigate the impacts of tourism on the natural environment, ensure that the State's natural resources are maintained for future residents and visitors, and support destination management, such as park improvements and beach improvement, nourishment, and maintenance projects."

     SECTION 3.  Section 237D-1, Hawaii Revised Statutes, is amended as follows:

     1.  By amending the definition of "gross rental" or "gross rental proceeds" to read:

     ""Gross rental" or "gross rental proceeds" means the gross receipts, cash or accrued, of the taxpayer received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations and the value proceeding or accruing from the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations, including resort fees without any deductions on account of the cost of property or services sold, the cost of materials used, labor cost, taxes, royalties, interest, discounts, or any other expenses whatsoever.  ["Gross rental" or "gross rental proceeds" includes the gross receipts derived from cruise fares.]  Every taxpayer shall be presumed to be dealing on a cash basis unless the taxpayer proves to the satisfaction of the department of taxation that the taxpayer is dealing on an accrual basis and the taxpayer's books are so kept, or unless the taxpayer employs or is required to employ the accrual basis for the purposes of the tax imposed by chapter 237 for any taxable year in which event the taxpayer shall report the taxpayer's gross income for the purposes of this chapter on the accrual basis for the same period.

     The words "gross rental" or "gross rental proceeds" shall not be construed to include the amounts of taxes imposed by chapter 237 or this chapter on operators of transient accommodations, transient accommodations brokers, travel agencies, and tour packagers and passed on, collected, and received from the consumer as part of the receipts received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations.

     Where transient accommodations are furnished through arrangements made by a transient accommodations broker, travel agency, or tour packager at noncommissionable negotiated contract rates and the gross income is divided between the operator of transient accommodations on the one hand and the transient accommodations broker, travel agency, or tour packager on the other hand, the tax imposed by this chapter shall apply to each operator and transient accommodations broker, travel agency, or tour packager with respect to that person's respective portion of the proceeds and no more.

     For the purposes of this definition, where the operator maintains a schedule of rates for identifiable groups of individuals, [such as kamaainas,] including kamaaina, upon which the accommodations are leased, let, or rented, gross rental or gross rental proceeds means the receipts collected and received based upon the scheduled rates and recorded as receipts in its books and records."

     2.  By deleting the definitions of "cruise fare", "cruise ship", and "cruise ship cabin".

     [""Cruise fare" means the total amount paid by a transient for a cruise ship cabin on a cruise ship, inclusive of any mandatory fees imposed by a cruise ship operator, owner, or representative thereof on a transient for the use of shipboard services, facilities, meals, and onboard entertainment, but does not include optional charges for shipboard services, meals, excursions, and onboard entertainment beyond the mandatory fee amount.

     "Cruise ship" means any ship that docks at any port in the State that charges a fee for and provides cruise ship cabins to transients.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to a transient."]

     SECTION 4.  Section 237D-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  There is levied and shall be assessed and collected each month a tax of:

     (1)  Five per cent for the period beginning on January 1, 1987, to June 30, 1994;

     (2)  Six per cent for the period beginning on July 1, 1994, to December 31, 1998;

     (3)  7.25 per cent for the period beginning on January 1, 1999, to June 30, 2009;

     (4)  8.25 per cent for the period beginning on July 1, 2009, to June 30, 2010;

     (5)  9.25 per cent for the period beginning on July 1, 2010, to December 31, 2025; and

     (6)  Ten per cent for the period beginning on January 1, 2026, and thereafter,

on the gross rental or gross rental proceeds derived from furnishing transient accommodations[; provided that an operator of a cruise ship shall be assessed and pay a tax of eleven per cent under this subsection on all gross rental proceeds derived from cruise fares prorated by the percentage of days docked at any port in the State in comparison to the total number of days of the voyage]."

     SECTION 5.  There is appropriated out of the cruise ship special fund established pursuant to section 266-B, Hawaii Revised Statutes, the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 for the purposes of this Act.

     The sum appropriated shall be expended by the department of transportation for the purposes of this Act.

     SECTION 6.  Section 1 of this Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect on July 1, 3000; provided that sections 2, 3, and 4 shall take effect retroactive to January 1, 2026.

Report Title:

DOT; TAT; Cruise Ships; Passenger Head Fee; Cruise Ship Special Fund; Appropriation

Description:

Requires the Department of Transportation to assess a per passenger head fee against cruise ships docking in the State's commercial harbors in addition to existing port user fees.  Establishes the Cruise Ship Special Fund.  Repeals existing law imposing the Transient Accommodations Tax on cruise ships, effective retroactive to 1/1/2026.  Appropriates funds.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO TRANSPORTATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 266, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

     "§266-A  Cruise ships; passenger head fee.  (a)  The department of transportation shall assess a fee of $10.00 per passenger against any cruise ship that docks in any commercial harbor in the State.  The fee shall be assessed at each port entry and shall be assessed in addition to existing port user fees pursuant to this chapter and set forth in rules adopted by the department of transportation pursuant to chapter 91, including port entry, dockage, and passenger fees.

     (b)  All fees collected pursuant to this section shall be deposited into the cruise ship special fund established pursuant to section 266-B.

     (c)  For the purposes of this section:

     "Cruise ship" means any ship that docks at any commercial harbor in the State that charges a fee for and provides cruise ship cabins to passengers.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to a passenger.

     §266-B  Cruise ship special fund; established.  (a)  There is established in the state treasury the cruise ship special fund, into which shall be deposited:

     (1)  All revenues from any fees collected pursuant to section 266-A;

     (2)  All contributions from public or private partners; and

     (3)  All interest earned on or accrued to moneys deposited in the special fund.

     (b)  Moneys in the cruise ship special fund shall be used solely for port facility and capital improvement projects to support cruise ship operations."

     SECTION 2.  Section 37-79, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§37-79[]]  Climate change and tourism destination management; projects; budget request.  The governor shall request, in the budget or the supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, that an amount of general funds that approximates the additional revenue generated by any increase to the transient accommodations tax rates pursuant to section 237D-2(a)(6) and (c)(4) beginning on January 1, 2026, and section 237D-2(e) beginning on July 1, 2026, [and by assessment of the transient accommodations tax on gross rental proceeds derived from cruise fares pursuant to section 237D-2(a)] be expended equally to advance specific projects to:

     (1)  Protect, manage, and restore the State's natural resources, including native forests, native plants and animals, aquatic resources, coastal lands, and freshwater resources;

     (2)  Increase the resilience of structures and infrastructure to natural and climate-related disasters, [such as] including hurricanes and sea level rise, and perform hazard mitigation activities, [such as] including wildfire and flood mitigation; and

     (3)  Improve the visitor experience, mitigate the impacts of tourism on the natural environment, ensure that the State's natural resources are maintained for future residents and visitors, and support destination management, such as park improvements and beach improvement, nourishment, and maintenance projects."

     SECTION 3.  Section 237D-1, Hawaii Revised Statutes, is amended as follows:

     1.  By amending the definition of "gross rental" or "gross rental proceeds" to read:

     ""Gross rental" or "gross rental proceeds" means the gross receipts, cash or accrued, of the taxpayer received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations and the value proceeding or accruing from the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations, including resort fees without any deductions on account of the cost of property or services sold, the cost of materials used, labor cost, taxes, royalties, interest, discounts, or any other expenses whatsoever.  ["Gross rental" or "gross rental proceeds" includes the gross receipts derived from cruise fares.]  Every taxpayer shall be presumed to be dealing on a cash basis unless the taxpayer proves to the satisfaction of the department of taxation that the taxpayer is dealing on an accrual basis and the taxpayer's books are so kept, or unless the taxpayer employs or is required to employ the accrual basis for the purposes of the tax imposed by chapter 237 for any taxable year in which event the taxpayer shall report the taxpayer's gross income for the purposes of this chapter on the accrual basis for the same period.

     The words "gross rental" or "gross rental proceeds" shall not be construed to include the amounts of taxes imposed by chapter 237 or this chapter on operators of transient accommodations, transient accommodations brokers, travel agencies, and tour packagers and passed on, collected, and received from the consumer as part of the receipts received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations.

     Where transient accommodations are furnished through arrangements made by a transient accommodations broker, travel agency, or tour packager at noncommissionable negotiated contract rates and the gross income is divided between the operator of transient accommodations on the one hand and the transient accommodations broker, travel agency, or tour packager on the other hand, the tax imposed by this chapter shall apply to each operator and transient accommodations broker, travel agency, or tour packager with respect to that person's respective portion of the proceeds and no more.

     For the purposes of this definition, where the operator maintains a schedule of rates for identifiable groups of individuals, [such as kamaainas,] including kamaaina, upon which the accommodations are leased, let, or rented, gross rental or gross rental proceeds means the receipts collected and received based upon the scheduled rates and recorded as receipts in its books and records."

     2.  By deleting the definitions of "cruise fare", "cruise ship", and "cruise ship cabin".

     [""Cruise fare" means the total amount paid by a transient for a cruise ship cabin on a cruise ship, inclusive of any mandatory fees imposed by a cruise ship operator, owner, or representative thereof on a transient for the use of shipboard services, facilities, meals, and onboard entertainment, but does not include optional charges for shipboard services, meals, excursions, and onboard entertainment beyond the mandatory fee amount.

     "Cruise ship" means any ship that docks at any port in the State that charges a fee for and provides cruise ship cabins to transients.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to a transient."]

     SECTION 4.  Section 237D-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  There is levied and shall be assessed and collected each month a tax of:

     (1)  Five per cent for the period beginning on January 1, 1987, to June 30, 1994;

     (2)  Six per cent for the period beginning on July 1, 1994, to December 31, 1998;

     (3)  7.25 per cent for the period beginning on January 1, 1999, to June 30, 2009;

     (4)  8.25 per cent for the period beginning on July 1, 2009, to June 30, 2010;

     (5)  9.25 per cent for the period beginning on July 1, 2010, to December 31, 2025; and

     (6)  Ten per cent for the period beginning on January 1, 2026, and thereafter,

on the gross rental or gross rental proceeds derived from furnishing transient accommodations[; provided that an operator of a cruise ship shall be assessed and pay a tax of eleven per cent under this subsection on all gross rental proceeds derived from cruise fares prorated by the percentage of days docked at any port in the State in comparison to the total number of days of the voyage]."

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 2050; provided that sections 2, 3, and 4 shall take effect retroactive to January 1, 2026.

Report Title:

DOT; TAT; Cruise Ships; Passenger Head Fee; Cruise Ship Special Fund

Description:

Requires the Department of Transportation to assess a per passenger head fee against cruise ships docking in the State's commercial harbors in addition to existing port user fees.  Establishes the Cruise Ship Special Fund.  Repeals existing law imposing the Transient Accommodations Tax on cruise ships, effective retroactive to 1/1/2026.  Effective 7/1/2050.  (SD2)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO TRANSPORTATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 266, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

     "§266-A  Cruise ships; passenger head fee.  (a)  The department of transportation shall assess a fee of $10.00 per passenger against any cruise ship that docks in any commercial harbor in the State.  The fee shall be assessed at each port entry and shall be assessed in addition to existing port user fees pursuant to this chapter and set forth in rules adopted by the department of transportation pursuant to chapter 91, including port entry, dockage, and passenger fees.

     (b)  All fees collected pursuant to this section shall be deposited into the cruise ship special fund established pursuant to section 266-B.

     (c)  For the purposes of this section:

     "Cruise ship" means any ship that docks at any commercial harbor in the State that charges a fee for and provides cruise ship cabins to passengers.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to a passenger.

     §266-B  Cruise ship special fund; established.  (a)  There is established in the state treasury the cruise ship special fund, into which shall be deposited:

     (1)  All revenues from any fees collected pursuant to section 266-A;

     (2)  All contributions from public or private partners; and

     (3)  All interest earned on or accrued to moneys deposited in the special fund.

     (b)  Moneys in the cruise ship special fund shall be used solely for port facility and capital improvement projects to support cruise ship operations."

     SECTION 2.  Section 37-79, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§37-79[]]  Climate change and tourism destination management; projects; budget request.  The governor shall request, in the budget or the supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, that an amount of general funds that approximates the additional revenue generated by any increase to the transient accommodations tax rates pursuant to section 237D-2(a)(6) and (c)(4) beginning on January 1, 2026, and section 237D-2(e) beginning on July 1, 2026, [and by assessment of the transient accommodations tax on gross rental proceeds derived from cruise fares pursuant to section 237D-2(a)] be expended equally to advance specific projects to:

     (1)  Protect, manage, and restore the State's natural resources, including native forests, native plants and animals, aquatic resources, coastal lands, and freshwater resources;

     (2)  Increase the resilience of structures and infrastructure to natural and climate-related disasters, [such as] including hurricanes and sea level rise, and perform hazard mitigation activities, [such as] including wildfire and flood mitigation; and

     (3)  Improve the visitor experience, mitigate the impacts of tourism on the natural environment, ensure that the State's natural resources are maintained for future residents and visitors, and support destination management, such as park improvements and beach improvement, nourishment, and maintenance projects."

     SECTION 3.  Section 237D-1, Hawaii Revised Statutes, is amended as follows:

     1.  By amending the definition of "gross rental" or "gross rental proceeds" to read:

     ""Gross rental" or "gross rental proceeds" means the gross receipts, cash or accrued, of the taxpayer received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations and the value proceeding or accruing from the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations, including resort fees without any deductions on account of the cost of property or services sold, the cost of materials used, labor cost, taxes, royalties, interest, discounts, or any other expenses whatsoever.  ["Gross rental" or "gross rental proceeds" includes the gross receipts derived from cruise fares.]  Every taxpayer shall be presumed to be dealing on a cash basis unless the taxpayer proves to the satisfaction of the department of taxation that the taxpayer is dealing on an accrual basis and the taxpayer's books are so kept, or unless the taxpayer employs or is required to employ the accrual basis for the purposes of the tax imposed by chapter 237 for any taxable year in which event the taxpayer shall report the taxpayer's gross income for the purposes of this chapter on the accrual basis for the same period.

     The words "gross rental" or "gross rental proceeds" shall not be construed to include the amounts of taxes imposed by chapter 237 or this chapter on operators of transient accommodations, transient accommodations brokers, travel agencies, and tour packagers and passed on, collected, and received from the consumer as part of the receipts received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations.

     Where transient accommodations are furnished through arrangements made by a transient accommodations broker, travel agency, or tour packager at noncommissionable negotiated contract rates and the gross income is divided between the operator of transient accommodations on the one hand and the transient accommodations broker, travel agency, or tour packager on the other hand, the tax imposed by this chapter shall apply to each operator and transient accommodations broker, travel agency, or tour packager with respect to that person's respective portion of the proceeds and no more.

     For the purposes of this definition, where the operator maintains a schedule of rates for identifiable groups of individuals, [such as kamaainas,] including kamaaina, upon which the accommodations are leased, let, or rented, gross rental or gross rental proceeds means the receipts collected and received based upon the scheduled rates and recorded as receipts in its books and records."

     2.  By deleting the definitions of "cruise fare", "cruise ship", and "cruise ship cabin".

     [""Cruise fare" means the total amount paid by a transient for a cruise ship cabin on a cruise ship, inclusive of any mandatory fees imposed by a cruise ship operator, owner, or representative thereof on a transient for the use of shipboard services, facilities, meals, and onboard entertainment, but does not include optional charges for shipboard services, meals, excursions, and onboard entertainment beyond the mandatory fee amount.

     "Cruise ship" means any ship that docks at any port in the State that charges a fee for and provides cruise ship cabins to transients.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to a transient."]

     SECTION 4.  Section 237D-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  There is levied and shall be assessed and collected each month a tax of:

     (1)  Five per cent for the period beginning on January 1, 1987, to June 30, 1994;

     (2)  Six per cent for the period beginning on July 1, 1994, to December 31, 1998;

     (3)  7.25 per cent for the period beginning on January 1, 1999, to June 30, 2009;

     (4)  8.25 per cent for the period beginning on July 1, 2009, to June 30, 2010;

     (5)  9.25 per cent for the period beginning on July 1, 2010, to December 31, 2025; and

     (6)  Ten per cent for the period beginning on January 1, 2026, and thereafter,

on the gross rental or gross rental proceeds derived from furnishing transient accommodations[; provided that an operator of a cruise ship shall be assessed and pay a tax of eleven per cent under this subsection on all gross rental proceeds derived from cruise fares prorated by the percentage of days docked at any port in the State in comparison to the total number of days of the voyage]."

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 2026; provided that sections 2, 3, and 4 shall take effect retroactive to January 1, 2026.

Report Title:

DOT; TAT; Cruise Ships; Passenger Head Fee; Cruise Ship Special Fund

Description:

Requires the Department of Transportation to assess a per passenger head fee against cruise ships docking in the State's commercial harbors in addition to existing port user fees.  Establishes the Cruise Ship Special Fund.  Repeals existing law imposing the Transient Accommodations Tax on cruise ships, effective retroactive to 1/1/2026.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

Relating to TRANSPORTATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 266, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

     "§266-A  Cruise ships; passenger head fee.  (a)  The department of transportation shall assess a fee of $6.50 per passenger against any cruise ship that docks in any commercial harbor in the State.

     (b)  All fees collected pursuant to this section shall be deposited into the cruise ship special fund established pursuant to section 266-B.

     (c)  For the purposes of this section:

     "Cruise ship" means any ship that docks at any commercial harbor in the State that charges a fee for and provides cruise ship cabins to passengers.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to a passenger.

     §266-B  Cruise ship special fund; established.  (a)  There is established in the state treasury the cruise ship special fund, into which shall be deposited:

     (1)  All revenues from any fees collected pursuant to section 266-A;

     (2)  Appropriations made by the legislature for deposit into the fund;

     (3)  All contributions from public or private partners; and

     (4)  All interest earned on or accrued to moneys deposited in the special fund.

     (b)  Moneys in the cruise ship special fund shall be used solely for port facility and harbor capital improvement projects, including shore power connectivity to support the cruise ship industry."

     SECTION 2.  Section 37-79, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§37-79[]]  Climate change and tourism destination management; projects; budget request.  The governor shall request, in the budget or the supplemental budget submitted to the legislature pursuant to section 37-71 or 37-72, that an amount of general funds that approximates the additional revenue generated by any increase to the transient accommodations tax rates pursuant to section 237D-2(a)(6) and (c)(4) beginning on January 1, 2026, and section 237D-2(e) beginning on July 1, 2026, [and by assessment of the transient accommodations tax on gross rental proceeds derived from cruise fares pursuant to section 237D-2(a)] be expended equally to advance specific projects to:

     (1)  Protect, manage, and restore the State's natural resources, including native forests, native plants and animals, aquatic resources, coastal lands, and freshwater resources;

     (2)  Increase the resilience of structures and infrastructure to natural and climate-related disasters, such as hurricanes and sea level rise, and perform hazard mitigation activities, such as wildfire and flood mitigation; and

     (3)  Improve the visitor experience, mitigate the impacts of tourism on the natural environment, ensure that the State's natural resources are maintained for future residents and visitors, and support destination management, such as park improvements and beach improvement, nourishment, and maintenance projects."

     SECTION 3.  Section 237D-1, Hawaii Revised Statutes, is amended as follows:

     1.  By amending the definition of "gross rental" or "gross rental proceeds" to read:

     ""Gross rental" or "gross rental proceeds" means the gross receipts, cash or accrued, of the taxpayer received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations and the value proceeding or accruing from the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations, including resort fees without any deductions on account of the cost of property or services sold, the cost of materials used, labor cost, taxes, royalties, interest, discounts, or any other expenses whatsoever.  ["Gross rental" or "gross rental proceeds" includes the gross receipts derived from cruise fares.]  Every taxpayer shall be presumed to be dealing on a cash basis unless the taxpayer proves to the satisfaction of the department of taxation that the taxpayer is dealing on an accrual basis and the taxpayer's books are so kept, or unless the taxpayer employs or is required to employ the accrual basis for the purposes of the tax imposed by chapter 237 for any taxable year in which event the taxpayer shall report the taxpayer's gross income for the purposes of this chapter on the accrual basis for the same period.

     The words "gross rental" or "gross rental proceeds" shall not be construed to include the amounts of taxes imposed by chapter 237 or this chapter on operators of transient accommodations, transient accommodations brokers, travel agencies, and tour packagers and passed on, collected, and received from the consumer as part of the receipts received as compensation for the furnishing of transient accommodations or entering into arrangements to furnish transient accommodations.

     Where transient accommodations are furnished through arrangements made by a transient accommodations broker, travel agency, or tour packager at noncommissionable negotiated contract rates and the gross income is divided between the operator of transient accommodations on the one hand and the transient accommodations broker, travel agency, or tour packager on the other hand, the tax imposed by this chapter shall apply to each operator and transient accommodations broker, travel agency, or tour packager with respect to that person's respective portion of the proceeds and no more.

     For purposes of this definition, where the operator maintains a schedule of rates for identifiable groups of individuals, such as kamaainas, upon which the accommodations are leased, let, or rented, gross rental or gross rental proceeds means the receipts collected and received based upon the scheduled rates and recorded as receipts in its books and records."

     2.  By deleting the definitions of "cruise fare", "cruise ship", and "cruise ship cabin".

     [""Cruise fare" means the total amount paid by a transient for a cruise ship cabin on a cruise ship, inclusive of any mandatory fees imposed by a cruise ship operator, owner, or representative thereof on a transient for the use of shipboard services, facilities, meals, and onboard entertainment, but does not include optional charges for shipboard services, meals, excursions, and onboard entertainment beyond the mandatory fee amount.

     "Cruise ship" means any ship that docks at any port in the State that charges a fee for and provides cruise ship cabins to transients.

     "Cruise ship cabin" means an accommodation or living quarter on a cruise ship that is provided to a transient."]

     SECTION 4.  Section 237D-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  There is levied and shall be assessed and collected each month a tax of:

     (1)  Five per cent for the period beginning on January 1, 1987, to June 30, 1994;

     (2)  Six per cent for the period beginning on July 1, 1994, to December 31, 1998;

     (3)  7.25 per cent for the period beginning on January 1, 1999, to June 30, 2009;

     (4)  8.25 per cent for the period beginning on July 1, 2009, to June 30, 2010;

     (5)  9.25 per cent for the period beginning on July 1, 2010, to December 31, 2025; and

     (6)  Ten per cent for the period beginning on January 1, 2026, and thereafter,

on the gross rental or gross rental proceeds derived from furnishing transient accommodations[; provided that an operator of a cruise ship shall be assessed and pay a tax of eleven per cent under this subsection on all gross rental proceeds derived from cruise fares prorated by the percentage of days docked at any port in the State in comparison to the total number of days of the voyage]."

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 2026; provided that sections 2, 3, and 4 shall take effect retroactive to January 1, 2026.

Report Title:

DOT; TAT; Cruise Ships; Passenger Head Fee; Cruise Ship Special Fund

Description:

Requires the Department of Transportation to assess a per passenger head fee against cruise ships docking in the State's commercial harbors.  Establishes the Cruise Ship Special Fund.  Repeals existing law imposing the Transient Accommodations Tax on cruise ships, effective retroactive to 1/1/2026.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 2954

Honolulu, Hawaii

RE:     S.B. No. 2698

        S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

     Your Committees on Ways and Means and Judiciary, to which was referred S.B. No. 2698, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TRANSPORTATION,"

beg leave to report as follows:

     The purpose and intent of this measure is to generate revenues to fund port facility and capital improvements for the State's harbors.

     More specifically, the measure retroactively repeals, effective January 1, 2026, the current imposition of the transient accommodations tax on cruise ships and instead assesses a per-head fee on cruise ships docking in the State's commercial harbors to be deposited into a cruise ship special fund.

     Your Committees received written comments in support of this measure from the Department of Transportation; Hawaii Stevedores, Inc.; Matson Navigation Company, Inc.; McCabe Hamilton & Renny Co., Ltd.; Norwegian Cruise Line Holdings Ltd.; Hawaii Harbors Users Group; Polynesian Adventure Tours; The Maritime Group; Hawaii Pilots Association; Kilohana Plantation; Show You Hawaii LLC; Hawaii Tour Consultants; and Hike Maui.

     Your Committees received written comments in opposition to this measure from one individual.

     Your Committees received written comments on this measure from the Department of Taxation, Department of the Attorney General, Hawaii Tourism Authority, Care for Aina Now Coalition Leadership Committee, and Hawaii Transportation Association.

     Your Committees find that there is an ongoing need for funding to maintain and upgrade the State's critical maritime infrastructure.  Based on cruise ship counts from fiscal year 2025, the Department of Transportation estimates that the State could receive up to $9,700,000 in annual revenue from the fee proposed by this measure.  Accordingly, your Committees find that this measure will help provide funding for the State to maintain and manage its current maritime infrastructure and to take actions to mitigate the impacts of coastal erosion, changing sea conditions, and pollution.

     Your Committees have amended this measure by changing the effective date to July 1, 2050, to facilitate further discussion on the measure.

     As affirmed by the records of votes of the members of your Committees on Ways and Means and Judiciary that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2698, S.D. 1, as amended herein, and recommend that it pass Third Reading in the form attached hereto as S.B. No. 2698, S.D. 2.

Respectfully submitted on behalf of the members of the Committees on Ways and Means and Judiciary,

STAND. COM. REP. NO. 2589

Honolulu, Hawaii

RE:     S.B. No. 2698

        S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

     Your Committees on Transportation and Economic Development and Tourism, to which was referred S.B. No. 2698 entitled:

"A BILL FOR AN ACT RELATING TO TRANSPORTATION,"

beg leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Require the Department of Transportation to assess a per passenger head fee against cruise ships docking in the State's commercial harbors;

     (2)  Establish the Cruise Ship Special Fund; and

     (3)  Repeal existing law imposing the Transient Accommodations Tax on cruise ships, effective retroactive to January 1, 2026.

     Your Committees received testimony in support of this measure from the Department of Transportation; Norwegian Cruise Line Holdings Ltd.; Honolulu Ship Supply; Polynesian Adventure Tours; The Maritime Group, Matson Navigation Company, Inc.; Hawaiʻi Harbors Users Group; Go Tours Hawaii; Hike Maui; Hawaii Tour Consultants LLC; Show You Hawaiʻi LLC; McCabe, Hamilton & Renny Co., Ltd.; Hawaii Stevedores, Inc.; Hawaii Pilots Association; and two individuals.

     Your Committees received comments on this measure from the Department of the Attorney General, Department of Taxation, Hawaiʻi Tourism Authority, Tax Foundation of Hawaii, Hawaii Transportation Association, and Care for ʻĀina Now Coalition.

     Your Committees find that cruise operations bring meaningful economic benefits across multiple industries while also sustaining jobs and tax revenue for the State.  Furthermore, the cruise ship industry plays an important role in strengthening the State's local supply chains and food resilience as cruise vessels represent an important source of revenue for local farmers and fishermen across the State.  Your Committees further find that Act 96, Session Laws of Hawaii 2025, (Act 96) imposed the Transient Accommodations Tax on cruise ships.  Act 96 is currently being challenged in court on the grounds that it violates the Tonnage Cause of the United States Constitution.  This measure will resolve this constitutional issue by replacing the challenged tax with a per passenger fee and support capital improvement projects for port facilities and harbors.

     Your Committees note the concern raised by the Department of Transportation that further clarity is needed regarding the assessment of the fee, uses of the Cruise Ship Special Fund, and that the new fee shall be assessed in addition to existing port fees.  Therefore, amendments to this measure are necessary to address these concerns.

     Your Committees have amended this measure by:

     (1)  Increasing the per passenger fee assessed against cruise ships that dock in any commercial harbor in the State from $6.00 to $10.00;

     (2)  Inserting language to specify that the fee shall be assessed at each port entry in addition to existing port user fees;

     (3)  Deleting language that would have required the deposit of appropriations made by the Legislature into the Cruise Ship Special Fund;

     (4)  Specifying that the moneys in the Cruise Ship Special Fund shall be used solely for port facility and capital improvement projects to support cruise ship operations; and

     (5)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Transportation and Economic Development and Tourism that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2698, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2698, S.D. 1, and be referred to your Committees on Ways and Means and Judiciary.

Respectfully submitted on behalf of the members of the Committees on Transportation and Economic Development and Tourism,