TO ENCOURAGE AIRLINES TO CONTINUE SERVICING CNMI
To encourage airlines to continue servicing the Commonwealth, House Speaker Blas Jonathan T. Attao (R-Saipan) has pre-filed a bill that would suspend aviation fuel tax payments during a state of significant emergency in the Commonwealth.
Attao’s House Bill 21-102 will add a new subsection in the statute to indicate the suspension of aviation fuel tax during declared emergency in the CNMI. Reps. Joel C. Camacho, Luis John DLG Castro, Marco T. Peter, John P. Sablan, and Ralph N. Yumul have signed on as the legislation’s co-authors.
The proposed subsection states that during a period of a declaration of significant emergency affecting air travel to the Commonwealth, and 60 days thereafter, the amount of aviation fuel tax imposed by the statute shall be excluded in the price of aviation fuel sold to international air carriers.
The seller of aviation fuel may apply with the Finance secretary for a tax credit for the amount of the aviation fuel tax excluded from the price of aviation fuel sold to international carriers during the period of significant emergency and 60 days after.
Attao said the request to suspend the arrivals of travelers from mainland China may be a prudent move to protect the health and welfare of the people living and visiting the CNMI but it will have an adverse financial effect on the airlines, and in turn negatively affect the CNMI’s economy.
Gov. Ralph DLG. Torres recently declared a significant state of emergency to address the medical issues associated with the coronavirus outbreak and the potential medical threat to the CNMI.
With Torres already taking steps to address the urgent medical issues, Attao’s legislation is being positioned as the legislative counterpart to mitigate the economic ramifications of that decision on the CNMI’s travel industry partners and the economy.
The speaker said that a fuel tax suspension should serve as an incentive for air carriers and mitigate the economic effects resulting from the emergency by reducing the costs of the airlines.
“It is our hope that, by reducing the costs to our airline partners, we will facilitate and maintain the status quo and potentially encourage them to increase their services to the CNMI and pass the realized savings to our tourists who ultimately drive the travel demand,” Attao said.
The legislation allows for the immediate benefit to be realized by the purchaser of aviation fuel by mandating that the fuel price to be paid shall be reduced by the amount of tax imposed and included in the purchase price associated with the Commonwealth Code.
Attao said because they realize that the tax paid by the seller has already been paid to the CNMI, this legislation also provides that “the seller who has properly reduced the price of the aviation fuel…may apply for a tax credit for the amount that it paid on the fuel that was sold tax-free.”