MVA takes issue with bill to divert portion of hotel occupancy tax

After nearly three years of talks of increasing the hotel occupancy tax by 5 percent and coming to an agreement to allocate the funds to the Marianas Visitors Authority for marketing purposes, a new bill is being proposed to divert 1 percent of that funding to the Saipan Mayor’s Office.

The proposed bill, House Bill 18-155, was introduced by Rep. Larry Deleon Guerrero (Ind-Saipan) and is currently being reviewed by the House Ways and Means Committee.

The bill wants to amend the hotel occupancy tax law to reserve 1 percent of the taxes collected for the mayor’s office’s beautification and maintenance projects.

HB 18-155 proposes that the mayor’s office “shall receive 1 percent but not to exceed $60,000 of the taxes collected.”

The bill states that “anything in excess of $60,000 shall be remitted to the CNMI General Fund.”

The bill states that CNMI relies heavily on the tourism industry as a primary source of private employment and public revenues. In order to attract more tourists to the CNMI, it is “necessary to maintain the beauty of our island.”

In an interview with Saipan Tribune, MVA executive director Perry Tenorio he feels “very uneasy” about talks to reallocate funds from the hotel occupancy tax for other purposes.

“We’ve had collaborations and discussions with [the Hotel Association of the Northern Mariana Islands] and they supported the 5-percent increase in the hotel occupancy tax with the understanding that the money is going to be reinvested back into the CNMI as a travel destination,” Tenorio said.

He noted that most members of the Legislature had voted to pass House Bill 18-2, the original bill that increased the hotel occupancy tax from 10 percent to 15 percent.

“So it’s really concerning that they are now considering reallocating resources that, in my understanding, as an initiative promise, will be reinvested back to the traveling industry,” he said.

Tenorio believes that a lot of the Commonwealth’s travel partners will be disappointed and disillusioned if HB 18-155 does go through.

“That was initially promised to be solely invested back into the traveling industry and is solely being used for the purposes,” he said.

He pointed out that hotel partners supported increasing the hotel occupancy tax because there was an implied promise that any increase will be used by MVA to promote the CNMI travel industry.

In an earlier statement, HANMI said that it supported the hotel occupancy tax increase with the government’s assurance that the funds raised would go toward marketing and destination enhancement.

“We strongly feel it is imperative to ensure that the funding stays intact to MVA so it can continue its work of attracting visitors,” HANMI stated.

MVA board president Marian Aldan-Pierce said that a consensus was reached to support the proposed increase with the understanding revenues will be given to MVA for its marketing use.

House Bill 18-2 was signed into law by Gov. Eloy Inos on March 11, 2013, in support of allocating the funds for MVA, increasing the hotel occupancy tax by 5 percentage points, from 10 percent to 15 percent.