RELATING TO TRANSPORTATION.

SB2698

THE SENATE

S.B. NO.

2698

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

Relating
to TRANSPORTATION
.

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

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

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"
�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.

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

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(c)
�
For the purposes of this
section:

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"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.

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

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�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:

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

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

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

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

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(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.
"

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SECTION

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

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"[
[
]�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:

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

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(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

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(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."

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SECTION

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

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

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""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.

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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.

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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.

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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.
"

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

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["
"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.

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"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.

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

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SECTION

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

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

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

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

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

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

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

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(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
]."

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

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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.

INTRODUCED BY:

_____________________________

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.