Cruise room A measure that would expand the state's 7.25 percent hotel room tax to cover cruise ships is dead this year in the Legislature, by a vote yesterday of the Senate Committee on Tourism.
tax dies
The Senate Tourism Committee
voted down the bill
By Tim Ruel
truel@starbulletin.comThe proposal, supported by the Maui Hotel Association, may surface again. Cruise ships represent a small but growing segment of the state's No. 1 industry, tourism.
Cruise ships carried 248,000 passengers in the isles last year, and that number could grow 11 percent to 275,000 passengers this year, according to cruise industry lobbyist Charles Toguchi.
Four years ago, the state hotel room tax was expanded to include time-share units, which helped to establish the $61 million annual fund for marketing Hawaii to tourists.
The cruise ship Norwegian Star, Hawaii's only year-round home-ported ship, pays an average of about $60,000 a week in fees to the state, according to its shipping agency. A measure passed by Congress would enable parent company Norwegian Cruise Line to operate three foreign-built ships in Hawaii without having to stop at a foreign port, which is currently required by law.
Local hotel associations want to make sure the cruise ships are paying their fair share of state taxes and fees. Cruise ship representatives think they are paying their share.
State Sen. Kalani English (D, East Maui-Molokai) said he introduced the room-tax measure because he doesn't think cruise ships are paying enough to cover the million-dollar cost of future harbor improvements.
The hotel room tax would apply only while cruise ships are sailing in Hawaiian waters, and would only cover the costs of a room, not the entire cruise, which are typically sold as a package that include meals and entertainment.
Sen. Donna Mercado Kim, chairwoman of the tourism committee, said she wants to know more about potential increases to state cruise fees before imposing a new tax on cruise ships.
The state Department of Transportation is reviewing plans for harbor improvements, which may or may not require higher fees from cruise ships, depending on the policy of Republican Gov. Linda Lingle, said Glenn Okimoto, state Harbors Division administrator. Lingle promised during her 2002 campaign that she would not raise taxes or fees, though she has supported an airport departure fee.
No other state that charges a hotel room tax imposes that tax on the cruise industry, said Tom Smyth, of the state Department of Business, Economic Development and Tourism.
The committee voted 4-0 yesterday to kill the room-tax measure for the remainder of this session.
Kim said she disagreed with the argument that cruise ships should pay the hotel room tax because they pose competition to hotels. "I think that people who want to go on cruise ships will go on a cruise," Kim said. "If we tax them out of the market and they don't come anymore, it'll affect everybody."
Hawaii represented 2.6 percent of the 2001 worldwide cruise market of 7 million passengers, according to the North West CruiseShip Association.
It's not yet clear how much the tax would add to the amount of a Hawaii cruise package. The Norwegian Star is currently advertising 7-day cruises on its Web site from $600 to $1,300.
According to state data, cruise passengers spend an average of 7.32 days in the state. About five days are spent on ship, and the rest is spent on land before and after the cruise.