Teno okays taxbreaks for banks

Gov. Pedro P. Tenorio has signed into law a measure exempting banks and other financial institutions from paying gross revenue tax for interest gained from loans extended to the government, as well as giving tax rebate for such income.

But the governor at the same time vetoed four other bills, including a proposal seeking to suspend collection of excise taxes for telecommunications equipment imported into Rota that officials said would allow establishment of cellular phone service on the island.

House Bill 11-513, a component of a recently-signed law appropriating the $30 million loan secured from Bank of Guam, was signed into Public Law 11-121, according to a new release from the Governor’s Office.

This new law will lower the cost of borrowing money under the interim financing scheme approved by the Legislature and the governor for the island’s capital improvement projects. The loan will be used to match federal construction grants under the 702 Covenant/CIP program.

Mr. Tenorio said that by providing tax relief to the financial sector in lending money to the government, it will be much easier for the Commonwealth to obtain the matching funds.

“These capital improvement projects, once underway, will jump start and help revitalize our ailing economy,” said the chief executive in a letter to the presiding officers of the Legislature.

Tax relief for Rota nixed

Another economic measure, however, failed to get his approval as he noted that HB 11-493 providing tax incentives to telecommunications firms investing on Rota is not a “fair” practice.

“Although I understand the desire to stimulate the economy by providing incentives to telecommunications businesses,” Mr. Tenorio explained, “this would not be a fair practice, as it favors one type of business over the others as well as providing preferential treatment to one senatorial district over the others.”

The governor also nixed a measure requiring the government to pay medical costs and insurance for its nonresident workers in fear that it would create rather than resolve existing problems.

Under the present system, the government is subsidizing medical insurance of its employees through the Government Health Insurance Program (GHIP) of the NMI Retirement Fund.

Public sector workers have the option to enroll under such a program or other private insurance in which they pay the full premium.

“The problem is who becomes responsible for medical costs of nonresident government employees who elect not to enroll under the GHIP or any other health insurance?” asked Mr. Tenorio.

While noting that it is commendable, he proposed that the measure, SB 11-148, instead mandate all contracts for government alien workers to enroll at GHIP or other private insurance company.

Since it would comply with the Nonresident Workers Act, the bill would impose an additional burden on the government as it would require it to cover embalming and transportation costs — a benefit not provided to resident employees, according to the governor.

CRM study not feasible

Meanwhile, Mr. Tenorio also rejected the proposal to require the Coastal Resources Management to conduct a study to determine the environmental impact of motorized watercraft on the coastal and marine environment of the CNMI.

HB 11-221 could not be “realistically implemented or enforced,” he said, noting the mandatory requirement as well as the time frame of such study is not adequate.

“It takes several years for a realistic study to determine the impact of certain activities in the coastal waters,” said the governor in the letter. “The cost of such a study must also be taken into consideration.”

HB 11-464 seeking funding for youth and Man’ Amko program activities was disapproved as it could lead to freezing revenues that could be used for other vitally needed programs or projects.

A provision sought allocation of five percent of the tax from jackpot winning from gaming devices for the proposed program, while another section would require the finance secretary to set aside 50 percent of the same tax into a special account.

“Earmarking tax revenues will reduce the general operations budget each fiscal year,” said Mr. Tenorio. “This process would freeze revenues that could be utilized for vitally needed programs or projects.”

He instead suggested that funding for youth and Man ‘Amko could be prioritized and included in the annual budget of the government.