The Senate on Friday passed a bill to permit the CNMI government to issue industrial revenue bonds to aid private sector development.
Senate Bill 19-74, authored by Sen. Sixto Igisomar (R-Saipan), allows the local government to issue an industrial revenue bond as permitted under Section 103 Internal Revenue Code.
The bond will be issued for “specified purposes” that meet “documented project priorities for economic development” centered on the creation of new employment, the bill says.
And it also permits the issuance of an industrial development bond to “leverage” the CNMI’s tax-exempt status for the benefit of a private development.”
It notes that the CNMI would not be liable for the repayment of the bond.
In a June 20 standing committee report, the Senate committee on Fiscal Affair states that after years of economic setbacks since the shutdown of garment industry, many efforts have been made to enhance the tourism industry.
“As we begin to witness the slight increase of our economic revenue, it is essential that the CNMI provide beneficial options to the private sector to sustain our local economy.”
The committee said the passage of the bill would offer developers the ability to use the CNMI’s tax-exempt status to avail of low interest bonds.
“As the beneficiary of the bond, private developers are also responsible for the bond repayment, therefore, relinquishing the CNMI from acquiring additional financial obligations.”
The bill notes that in the 1960s, U.S. Congress began imposing restrictions on the limits of and use of bond proceeds, due to the loss of interest on tax-exempt bonds.