HANMI: Don’t change BGRT law

The Hotel Association of Northern Mariana Islands has asked the House of Representatives to defer action on a proposed measure that will amend the Business Gross Revenue tax because it would have a negative effect on the hotel and tourism industry.

In a letter to House Ways and Means Committee Chair Antonio M. Camacho, David Wiseman, legal counsel of HANMI, said the hotel association does not see any need to amend the Gross Revenue provisions of the Code since this concern has already been addressed under existing laws.

HANMI maintains that the tourism industry on the island is highly sophisticated and one that operates based on contracts between tour or travel agents and hotels that are negotiated several months and even a year in advance before the arrival of tourists in the CNMI.

Disrupting the tourism commitments during the term of existing contracts could upset the existing arrangements and conditions and threaten the agreements with tour operators that handle the arrival of visitors in the Northern Marianas.

“In other words, any change that would result in additional costs or charges to any of the participants in the tourism contracts and arrangements would be totally imprudent at this time,” he said. All HANMI members include the money received from the tourist’s coupons in their gross receipts.

Tourists pay for their tour packages in Japan which usually covers hotel rooms and a few meals. The hotel will just bill the tour operator or travel agent when it receives the coupon from the tourists for the room and a few meals. Once the tour operator pays the hotel, it becomes part of the gross revenues of the hotel subject to the BGR tax. The income of the tour operator or travel agent when they bill the office in Japan from where the sale originated is also subject to the BGR tax.

Amid the decline on the island’s tourism economy, Mr. Wiseman asked for consideration on any laws that will impose additional burden on the business community.

“As expressed by HANMI recently in several forums, the hotel and tourism industry is going through some very difficult economic times, and to have a new charge or cost imposed upon them during these times may be the proverbial straw that breaks the camel’s back,” Mr. Wiseman said.