Panel irons out dispute in cutting grace period to pay excise tax

A Senate and the House of Representatives conference committee has ironed out their differences on a bill that proposes to reduce the 30-day grace period for importers to pay the excise tax on goods that require Customs inspection and clearance.

After deliberations last Thursday, the Senate conferees, led by chair Senate vice president Sen. Jude U. Hofschneider (R-Tinian), and House conferees, led by chair Rep. John Paul A. Sablan (R-Saipan), arrived at a compromise to address those differences, which chiefly dealt with how long the grace period would be and which senatorial district the amended law would apply.

The current law allows taxpayers to pay the excise tax within 30 days after entry of the goods. The proposed bill will require taxpayers to pay the excise tax upon clearing Customs.

Sablan, who is the author of the bill, said in an interview that the Senate amendments included provisions that would only apply to Rota and Tinian, and not Saipan. “We thought that it’s kind of unfair,” he said.

When the conference committee sat down to iron out their differences, they just added Saipan to the bill, so it becomes a generalized Commonwealth-wide approach for all senatorial districts. “So it’s pretty much a quick fix,” Sablan said.

What took the committee much longer to resolve were to clarify issues, deliberate on the differences, and consult with their legal counsels on possible constitutional issues. “But we were able to address them and I am happy,” said Sablan.

He said this bill will help the Division of Customs in collecting revenues. “So that’s the full intent of this legislation—just to assist [and] give more tools for the Division of Customs to collect taxes, most especially [from short-term] businesses that are just subcontracts here for like three to six months,” Sablan said. He pointed out that there were such short-term businesses here in 2014 when the CNMI’s economy was booming and there were businesses from off-island that were here for a short time for their expertise. “And we want to make sure that those businesses that come for just for a short bit of time, before they leave we want to make sure that we collect whatever is due to the Commonwealth,” Sablan added.

Speaking in a separate interview, Hofschneider said the Senate sought to amend the bill to give minimum deferred payment grace periods of 30 days and 15 days, respectively, for post-clearance payments for qualified low-risk importers, and also allow the Customs director to promulgate rules 90 days upon legislation becoming law. The Senate also added another language where there is a designation of the Customs director or his/her designee to execute the policy on Rota and Tinian.

“So I appreciate the meeting because we’re able to fix the difference and we’re ready to move forward to transmit this to the governor’s office,” Hofschneider said, adding that the legislation just aims to improve efficiency in collection of excise taxes.

Next step, Hofschneider said, is the Senate and House will vote on the conference committee product.

If adopted, he said, the bill will go to the governor for his review and disposition.

The other House conferees were Reps. Joel C. Camacho (R-Saipan) and Luis John DLG Castro (R-Saipan). The other Senate conferees were Sens. Vinnie F. Sablan (Ind-Saipan) and Sixto K. Igisomar (R-Saipan).

The conference committee was created after the House rejected the Senate amendments to House Bill 21-104 in the form of HS1, SD1.