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Thursday, April 24, 2014

5 pct. hotel tax hike eyed by April 1

Weeks after Gov. Benigno R. Fitial asked the Legislature through his fiscal year 2013 budget message to act swiftly on a plan to increase the hotel occupancy tax to help fund the marketing of the CNMI as a tourist destination, House floor leader George Camacho (R-Saipan) pre-filed yesterday a bill raising the hotel occupancy tax by 5 percent effective April 1, 2013.

If Camacho’s bill becomes law, the CNMI’s hotel occupancy tax will increase from the current 10 percent to 15 percent.

The Fitial administration-sponsored bill seeks to help finance tourism-related programs in the CNMI, whose tourism-based economy is still not out of the woods yet.

“Based on conversations with HANMI [Hotel Association of the Northern Mariana Islands] and MVA [Marianas Visitors Authority], they support this bill. But we’re waiting for formal, written comments from them,” Camacho told Saipan Tribune in an interview yesterday.

HANMI president Nick Nishikawa earlier said that HANMI is more amenable to an increase in hotel occupancy tax rather than a new $15 fee on transient occupants of hotels and motels, which was supposed to be implemented last July 1.

The transient fee was already a later version of two related public laws—an airline incentives program for travel agencies that bring in more tourists from non-U.S. destinations and charge passengers from these mostly Asian countries $15 travel promotion fee.

A Garapan hotel executive who has been in the CNMI for more than a decade said that “raising taxes at this point will hurt hotel businesses and that will trickle down to employees who may be subjected to RIF [reduction in force] to be able to pay the increased tax and at the same time make profit.”

“But if the HANMI leadership is supporting this, we would like to see an official comment,” the hotel executive said.

Hotels and other businesses already had to contend with another 50-cent increase in minimum wage last Sept. 30 amid a slow economy.

HANMI reported a 66.95-percent occupancy in September among its 12 member hotels, a 7-percent increase from September 2011. This translates to 48,243 of 72,060 available room nights that were sold in September 2012, compared to 43,579 of 72,240 over the same period last year.

House Speaker Eli Cabrera (R-Saipan) has yet to call for a session as of yesterday, so there’s no telling when this bill will be formally introduced along with Vice Speaker Felicidad Ogumoro’s (R-Saipan) “fat” tax bill to help finance the Commonwealth Healthcare Corp.

Camacho’s bill says in order to promote recreation and tourism, the Legislature finds that public financial support should be provided for constructing, equipping, improving and maintaining project, agencies and facilities that promote recreation and tourism.

It says public support is also required to effectively market the CNMI as a premier tourist destination.

HB 17-322 creates a Marianas Visitors Authority Trust Fund administered by the Finance secretary, into which revenues meant for MVA shall be deposited. This MVA trust fund is supposed to be separate from the CNMI general fund.

MVA shall expend no more than 5 percent of the funds per fiscal year from the MVA trust fund for destination enhancement programs.

The bill also gives up to 2 percent or $400,000 of the funds per fiscal year from the MVA trust fund to Rota and Tinian, “to be used to implement charter flight tourism incentives and promotional programs.” The mayors are the expenditure authorities of these funds.

The $114-million budget law for fiscal year 2013 gave only a $2-million budget to MVA, in anticipation of this bill’s signing into law.

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