While he appreciates the Department of Finance staving off a planned 700-percent hike in the customs and quarantine tax, Marianas Visitors Authority managing director Chris Concepcion hopes that, if it does decide to re-impose the tax increase, it would do so in increments.
He said MVA wants a permanent stay on the planned increase of the CQ tax until the CNMI stabilizes the airline situation.
“Overall, we don’t oppose a gradual increase in the CQ tax. But from $1 to $7 with a two-month notice [is not good],” said Concepcion last week. “I understand that the rationale is that it has never been increased in the past 20 years, but that doesn’t justify the 700-percent increase.
“We know [that Customs] has its own needs, but we cannot bite the hand that feeds [us]. Without the airlines, there is no revenue. What are you going to do if they pull out? Then we have zero. You got to balance it. Yes, we have to make sure that we cover our costs but you also have to do it in a responsible way,” he said.
Before Finance decided to delay the 700-percent rise in CQ tax, Concepcion said that several airlines reached out to him expressing strong opposition to it and some even threatened to pull out of the CNMI.
“[One] airline said they will either reduce or pull out from the CNMI. We don’t need that right now. Overall, we don’t oppose a gradual increase in the CQ tax. But from $1 to $7 with a two-month notice [is not good],” he said.
The average CQ tax paid by carriers flying to the CNMI is between $7,000 and $10,000 a month, depending on how big the aircraft, how many passengers, and how frequent the schedule is.
“At this point, it’s very hard to invite an airline over,” said Concepcion.
He said a 100-percent increase in the CQ tax is more palatable than the originally proposed 700-percent hike.
“I think just a 100-percent increase from $1 to $2 is reasonable. I think a gradual increase of $1 spreading out that $7 increase into seven years or 10 years is better,” he said.
The $7 CQ tax was originally scheduled for implementation starting March 1, 2018.