Yumul: Enough with tax breaks for investor

The investor behind the multimillion dollar construction project at the LaoLao Bay Golf Resort should not be given any more tax breaks than it already is given, according to a Saipan lawmaker.

Rep. Ray N. Yumul has introduced a resolution urging the Commonwealth Development Authority to deny a request to add benefits under the qualifying certificate program to Saipan LauLau Development.

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.

According to Yumul, Saipan LauLau Development and the governor are now asking CDA to amend the qualifying certificate to increase the incentive cap. In response, CDA has begun efforts to amend its regulations and allow for reconsideration of an approved qualifying certificate.

“We’re basically bending over backwards to accommodate [Saipan Laulau Development],” Yumul said in an interview. “As chairman of the House Committee on Ways and Means, I am concerned because all of these tax breaks affect government revenue.”

But press secretary Charles P. Reyes Jr. maintained that the resort deserves more incentives, pointing to the magnitude of its investment and the increasing number of flights that its parent company, Kumho Asiana, is bringing to Saipan.

“The governor considers Kumho Asiana an anchor investor. He wants to provide every reasonable incentive to encourage them to continue investing in the CNMI,” Reyes said.

In his resolution, Yumul argues that the government has more than shown its support for the investor. He notes that the Legislature has granted the resort 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.

“[T]he current benefits such as the low rental rate … and the benefits of the current qualifying certificate granted to Saipan LauLau Development Inc., are sufficient as an investment incentive,” the resolution states.

“Granting additional terms to the initial qualifying certificate to Saipan LauLau Development Inc., in addition to the benefits already granted to it, will only add to the burden of the CNMI’s economy,” it adds.

According to a report issued by the resort, the CNMI stands to see an estimated $387 million worth of direct and indirect economic benefits after the golf project’s completion.