Senate shelves rebate cut; OKs cigarette tax hike, tax amnesty

Senators shelved yesterday on Rota a bill reducing the income tax rebate, essentially killing it at least for now. But senators passed two other revenue-generating bills that provide tax amnesty and raise cigarette tax by 75 cents and then by another $1 three years later.

Both of the revenue-generating bills are now headed to Gov. Eloy S. Inos for action.

Also heading to the governor after the Senate’s passage yesterday is a bill that vests the Commonwealth Healthcare Corp. with some 38,574 square meters of public lands adjacent to the hospital, but strictly for the construction of medical facilities directly associated with the corporation’s operations.

Senate President Ralph Torres (R-Saipan) and other senators said the Senate also confirmed the governor’s two appointees to the Commonwealth Utilities Corp. board of directors: Eric C. San Nicolas and Evelyn M. Mendiola. The vote was 8-0 each. Only Sen. Frank Borja (Ind-Tinian) was absent.

By a vote of 8-0, senators shelved House Speaker Joseph Deleon Guerrero’s (Ind-Saipan) House Bill 18-69, House Substitute 1, which cuts the income tax rebate from 90 percent to 70 percent at the highest rebate level with proportional reduction at the lower levels.

The bill, which the Fiscal Affairs Committee recommended for passage, would have reduced rebates from the Northern Marianas Territorial Income Tax and appropriated the revenues from Chapter 7 tax to the Fund’s defined benefit plan members.

Cigarette tax hike, tax amnesty

Senators passed by a 7-0 vote Rep. Tony Sablan’s (Ind-Saipan) tax amnesty bill, HB 18-166, HD1.

Sen. Paul Manglona (Ind-Rota), who abstained from voting on the bill, told Saipan Tribune yesterday that he’s “not comfortable” with another tax amnesty when the CNMI government recently offered one. He said it’s too soon to have another one, and the government cannot afford to do this every time.

Under a tax amnesty program, taxpayers may request for the waiver of penalty and interest imposed on late-filed returns, under-reported income, and delinquent tax liabilities.

Senators also passed a conference committee version of HB 18-118, which increases the CNMI’s cigarette tax from the current $2 to $2.75 for three years, and then to $3.75 after that. The vote was 8-0.

The bill, authored by House floor leader Ralph Demapan (Cov-Saipan), seeks to gradually raise the cigarette tax to discourage cigarette smoking while at the same time fund cancer treatment programs and the government health insurance as a result of a tax hike.

The original bill would have increased the cigarette tax by an outright $2, doubling the current tax to $4. But a “compromise” version produced by a six-member House and Senate committee made it a gradual increase of $1.75 spread out in four years.

A pack of cigarettes that retails for $3.75 right now could go up to $4.50 once the bill is signed into law.

The compromise bill reserves 3 percent of excise taxes collected for cancer treatment and programs. That 3 percent comes from a decrease in excise tax percentage collected for the solid waste management program, from 10 percent to now 7 percent. Moreover, 50 percent of all excise taxes collected from this will be deposited into an account to fund the payment of the CNMI government’s share of the Group Health and Life Insurance benefits and for enforcement.

CHC land
Also by a vote of 8-0, the Senate passed Rep. Mario Taitano’s (Ind-Saipan) HB 18-156, HD1, vesting CHC with public land adjacent to the hospital. Over the years, the same tract of land has been eyed for a shopping mall and a federal courthouse, among other possible uses.

The governor has been saying that the Department of Public Lands is vested with the proper disposition of public lands, but there is no telling whether he would sign or veto the bill.