CPA rejects lower passenger tax plea

The Commonwealth Ports Authority has declined fresh pleas by the Hong Kong Entertainment (Ltd.) to reduce the passenger head tax it charges to Tinian Shipping & Transpiration Inc. aimed at easing the financial woes of its subsidiary.

Hong Kong Entertainment, which operates Tinian Dynasty Hotel and Casino, has been prodding CPA to cut the existing tax rate by $5 to $1 for two years.

However, the ports authority thumbed down the request, citing the agency’s need to raise revenues in order to reinstate the 80-hour work schedule per pay period of its employees. CPA has cut down the manhours due to declining income.

According to CPA Board Chairman Roman S. Palacios, the Tinian Legislative Delegation has been informed of the board’s decision during a recent meeting in the island municipality . Hong Kong Entertainment has sought the backing of the delegation for the two-year tax break.

“We told them outright that we cannot afford to reduce the rate because we want to reinstate the eighty-hour per pay work schedule,” said Palacios.

Tinian officials wrote to CPA seeking approval of the financially-troubled company’s request.

The ports authority wants to resolve the issue right away because they have to amend the agreement entered into by CPA with Tinian Shipping on the use of Saipan Harbor so that port officials can carry out its own collection of the passenger head tax.

However, Hong Kong Entertainment board chairman Michael Kwan renewed his appeal for a reduced passenger tax in light of declining revenues due to poor visitor arrivals.

Kwan said the tax break will allow them to carry out a marketing campaign and charter flights to boost tourist arrivals on Tinian Dynasty.

Hong Kong Entertainment spent over $12 million when it acquired the two high speed ferries — M/V Tinian Express and M/V Saipan — to service tourists from Saipan to Tinian.

Recently operation of the two vessels resumed after it was suspended for almost two months by the federal court due to non-payment of the company’s debt to Debis Financial Services.

While CPA would like to help Hong Kong Entertainment and Tinian Shipping, the ports authority also has to take into account its own financial obligations, said Executive Director Carlos H. Salas. The seaport division has a $33 million debt.

In order to save Tinian Shipping, Kwan sent a letter to CPA five months ago when the head tax was only $3.75. In his letter, he proposed to CPA two options: a reduction in passenger head tax to $1 or charge the head tax only to paying passengers for two years.

But CPA ruled out any of the suggestions put forward by Kwan, and officials said they will carry out its own collection.

Based on its previous record, Tinian ferry had an average of some 22,000 passengers a month, and if Tinian Shipping’s request is granted, it would translate to losses of $132,000.

“We want to know what they can do to help us with this problem. Of course, we want to help but we want to make sure that we will not sink when we do that,” said Palacios.

Salas said the ports authority would like to assist Tinian Shipping but CPA has a facility to run, personnel to pay and obligations to meet.