Bill on tax breaks likely to get Senate’s endorsement

Senate Vice President Thomas P. Villagomez expressed support for legislation that will grant tax breaks to investors in tourism and high technology industries, noting the need to boost the islands’ economy.

A House measure proposing a tax incentive program for the two economic sectors is pending in the Senate, and Mr. Villagomez said he favors such proposal.

“The Senate will be looking into the legislation, but personally I’m ready to support it,” he said in an interview yesterday.

Key players of the local tourism industry had met with members of the upper house where the issue of tax incentives for investors was discussed.

HB 12-199 or the Tourism and Technology Development Incentive Act unanimously passed the House early this month in yet another effort to revive the economy.

Sponsored by House Floor Leader Oscar M. Babauta, the measure seeks to grant a waiver of up to 100 percent of all taxes paid by a business covered by the program to the government for the next 25 years.

It also offers 100 percent rebate to owners of individual units of condominiums operated as resort hotels of all income taxes paid on all profits and revenues by the unit owner for 25 years.

Proponents believe the measure would spark major renovations and expansion boom in the tourism industry, while enticing new investments in the growing hi-tech sector such as computer and data processing.

According to Mr. Villagomez, this is just what the CNMI needs to jump-start the economy again after the impact of the Asian financial crisis pulled down the number of visitors to the islands.

“This is a piece of legislation that some developers are looking for,” he explained.
“Some members of the Senate have also expressed support for it, although we haven’t officially discussed the proposal.”

The Senate Committee on Resources, Economic Development and Programs chaired by Floor Leader Pete P. Reyes is expected to discuss the House bill before voting on it, he added.

The proposed incentive program will cover both new and existing businesses engaged in tourism and hi-tech industries with investments of as little as $500,000.

In exchange for the waivers on taxes, beneficiaries of the program will be required to give something back to the community, either through training or investments in public infrastructure, according to the bill.

The Commonwealth Development Authority, the lead agency tasked to implement the program, shall determine beneficiaries based on impact of their businesses on local tourism market, financial risks involved in the investments, their location as well as their importance to CNMI’s entire economic program.