End corporate welfare

Last week, Mr. Antonio Muña, on behalf of Ocean Vista, replied to the testimony I submitted to the Commonwealth Development Authority. Since I was accused of spreading “misinformation,” I thought it was necessary to offer my response to his letter.

Mr. Muña claims that I refer to the QC program as a tax loophole. Not once have I ever alluded to the QC as a tax loophole. In effect, the QC program is corporate welfare. It presumes that companies can’t survive or aren’t able to make a profit without it. This is exactly the case with Ocean Vista. It was Ocean Vista itself that forecasted that without 25 years of tax abatement, it stands to lose $711,000. Those were his figures. Not mine. In addition, the law that he was quoting was established 15 years ago when Saipan was experiencing the effects of the Asian financial crisis. Times have changed and it goes to show how outdated this law is.

I did not intend to mislead with Ocean Vista’s leasehold. I received my information from government sources and I apologize if I was misinformed in this regard. This demonstrates the confusion that is circulating within the government.

Mr. Muña listed several risks to Ocean Vista’s investors that are associated with operating their business, but what he’s really saying is that he wants the people of the CNMI to hedge those risks for Ocean Vista. I should remind him that hundreds of businesses already in the CNMI face these risks head on. We adjust our business models to cope with economic realities.

It is predictable that a company applying for the QC would tout the “economic multiplier effect.” Let me be clear: 100 percent of companies on island engage in commerce with other companies on island. It’s a part of doing business here. No company on island can provide all of its products and services on its own. We are all part of the economic multiplier effect and we all pay taxes. Also, correct me if I’m wrong, but the Hotel Occupancy Tax is directly earmarked for MVA and other tourism related activities. Therefore, other public agencies like Public Health and Public Safety do no benefit from this tax.

Ocean Vista says that it “will have to pay for improved traffic development at its entrance plus upgrade water supply and sewer lines,” but again, these are development costs generally covered by developers anyway. Our people should be concerned with whether Ocean Vista will be paying the taxes to help maintain these and other public infrastructure that will benefit everyone, not just their own interests.

Mr. Muña is correct to imply that the QC program is a legal program, but we should ask ourselves if it is fair to taxpayers. I understand that the incentives are not guaranteed simply by filing an application, but the issue of corporate welfare still remains because of the unfair advantage the QC program allows. We encourage Ocean Vista to invest and develop here but not in this manner or at the expense of the people of the CNMI.

I would like to call upon all taxpaying citizens to take a stand and end corporate welfare.

Bo Palacios
Business Development Manager
JC Tenorio Enterprises