Saipan Tribune

Wednesday, May 22, 2013

Wednesday, October 03, 2012

Fitial wants 5% increase in hotel tax

Gov. Benigno R. Fitial is asking the Legislature to act swiftly on a proposal to increase the hotel occupancy tax by 5 percent, instead of imposing a new $15 fee on transient occupants of hotels and motels which was supposed to be implemented last July 1 to help fund the overseas marketing and promotion of the CNMI as a tourist destination.

But the administration-sponsored bill has yet to be pre-filed in the House of Representatives as of yesterday, lawmakers said yesterday.

“I ask that the Legislature entertain this measure expeditiously so as to revive our sole economic driver, which will in turn bring more revenues to all CNMI businesses and government services,” Fitial said in his fiscal year 2013 budget law transmittal to House Speaker Eli Cabrera (R-Saipan) and Senate President Paul Manglona (Ind-Rota).

The $114-million budget law for FY 2013 gave only a $2 million budget to the Marianas Visitors Authority.

This was in anticipation of a repeal of Public Law 17-75, that would provide additional funding to the CNMI government's tourism agency.

“Public Law 17-75 is expected to be repealed as it is difficult to implement after receiving significant opposition from CNMI hoteliers. As such, replacement legislation will be introduced to increase the hotel occupancy tax by 5 percent to achieve the goals set by PL 17-75,” Fitial told lawmakers.

Back in July, Lt. Gov. Eloy S. Inos tossed the idea of a 5-percent increase in hotel occupancy tax but at the time, Hotel Association of the Northern Mariana Islands chairman Nick Nishikawa said the hoteliers hope it would only be a 3-percent increase initially and gradually increase it to 5 percent later.

Fitial's letter to the Legislature on Sunday affirmed a 5-percent increase in hotel occupancy tax-from the current 10 percent to 15 percent.

But because a bill has yet to be pre-filed, there's no telling when the target date of implementing a 5-percent increase will be.

In July this year, some hotels tried to collect a new $15 tourism fee from transient occupants of hotels and motels to comply with PL 17-75, but it didn't sit well with tourists. Other hotels themselves didn't want to inconvenience their guests. HANMI asked the government to increase the hotel occupancy tax instead to simplify the process.

The Legislature has to first amend the new $15 tourism/environmental law, and then the hotel occupancy tax law to effectuate this new proposal.

The administration believes a 5-percent hotel occupancy tax increase would collect pretty much the same amount as imposing a new $15 fee, for a total of some $6 million annually. The money raised will be used strictly for tourism promotion and will not go into the general fund.

The original form of this proposal to assess more tourism-related fees was a law intending to provide incentives to travel agencies that bring in more tourists from Asian countries to the CNMI and charge passengers from these non-U.S. destinations a $15 travel promotion fee.

That law was later amended imposing a $15 fee collected from transients who pay for lodging in a room of a hotel, lodging house, motel, resort motel, apartment, apartment motel, rooming house, condominium, or similar facility in the CNMI. The fee is supposed to be assessed one time for each visit or trip to the CNMI. This will again be amended to impose a 5-percent hotel occupancy tax increase instead.