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Hawaii has made history by becoming the first state in the U.S. to implement a climate impact fee aimed at enhancing environmental stewardship and climate resilience. Officially signed into law as Act 96, the new “Green Fee” will increase the state’s transient accommodations tax (TAT) by 0.75 percent, effective January 1, 2026. This adjustment raises the overall TAT to 11 percent, which will apply to hotel stays, short-term rentals, and, for the first time, cruise ship accommodations.
The introduction of this fee is a response to Hawaii’s pressing need for enhanced disaster preparedness, particularly following the devastating 2023 Maui wildfires that resulted in over 100 fatalities and significant destruction in Lahaina. In the wake of these climate-driven disasters, Governor Josh Green formed the Climate Advisory Team (CAT) to develop strategies for addressing climate threats. One of CAT’s primary recommendations was to establish a dedicated funding stream to support mitigation and disaster preparedness initiatives.
The projected revenue from the Green Fee is approximately $100 million annually, with the additional charge for a traveler staying in a hotel with a nightly rate of $300 amounting to about $2.25. The law also includes cruise ship passengers, who were previously exempt from Hawaii’s TAT, promoting greater equity within the tourism sector.
Future projects funded by the Green Fee will be outlined in the upcoming legislative session, focusing on climate and hazard resiliency efforts, sustainable tourism initiatives, and environmental restoration. This move aligns Hawaii with a growing trend among global destinations that have introduced tourist taxes to address environmental concerns. In 2023, regions such as Greece, Bali, and the Galápagos Islands have also implemented or increased fees to support conservation and sustainability efforts.
Experts indicate that the success of such fees relies on effective execution. While some programs have struggled to balance tourism numbers with environmental goals, others have effectively directed tourism revenues towards impactful environmental work. Hawaii’s Green Fee aims not only to fund necessary infrastructure but also to promote more responsible tourism practices, reinforcing the connection between the state’s economy and its natural environment.
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