House says no to more tax breaks

The House of Representatives has opposed granting additional tax breaks for the investor behind the multimillion-dollar construction project at the LaoLao Bay Golf Resort.

The lawmakers, by a 10-7 vote on Thursday, adopted a resolution asking the Commonwealth Development Authority to deny a request for more benefits under the qualifying certificate program for Saipan LauLau Development, a subsidiary of the South Korean conglomerate Kumho Asiana.

Earlier this year, CDA and Gov. Benigno R. Fitial approved a plan to provide up to $18 million in tax relief for the $68.8 million golf hotel, or “golftel,” a complex with condominium-style apartments for golf tourists. The tax relief ceiling is significantly less than the $27.7 million the resort had requested. Saipan LauLau Development and the governor are now asking CDA to amend the qualifying certificate to increase the incentive cap. In response, CDA has taken steps to amend its regulations and allow for reconsideration of an approved qualifying certificate.

Fitial, who supports giving Kumho Asiana additional tax breaks, has called the resolution “an attempt to sabotage the CNMI’s economic recovery efforts during a time of global financial crisis.”

In a memorandum to the House members, the author of the resolution said the Legislature, in recognition of the Kumho Asiana’s contributions, has been accommodating to the investor. Rep. Ray N. Yumul noted that the Legislature granted the investor a new 40-year lease agreement for 161 hectares of land at a rental rate of $103,000 a year, a substantial decrease from the original rental amount of $384,000. He adds that the investor has been given relief from all applicable taxes, except for alcoholic beverage tax.

Yumul added that the resolution intends to promote economic recovery by urging CDA “to maintain the cap on the already very generous tax benefit package of Kumho’s qualifying certificate.”

“There must be a balance between the CNMI’s economic recovery and protecting the interests of the people,” he said.

On Wednesday, officials of LaoLao Bay Golf Resort disclosed that the construction project has been scaled down. The total investment to the resort has been reduced from $68 million to $60 million. The completion of the project, originally set for July 1, 2009, is now expected in the end of 2009.