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Tax incentives to tourism investors alarm MVA
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Posted on Aug 04 2000
The Marianas Visitors Authority Board has expressed concern on the possible effects of a proposed measure that will provide tax incentives to CNMI businesses and potential investors on tourism-related projects on the agency’s share of the hotel room tax.
House Bill No. 12-233 provides for the establishment of a Governor’s Commission composed of five members, whose task is to review tourist-related tax incentives for a period of five years. Members of the commission shall serve for a term of two years.
According to the bill, the incentives will cover the renovation or expansion of an existing hotel provided that such work will be completed within five years and overseas tourism promotion.
The Commission will offset the tax from the applicant’s payment of hotel occupancy tax the following calendar year, provided adequate documentation of the expenditures submitted to the Commission.
Board Director JM Guerrero, who helped in the drafting of HB 12-233, noted the importance of providing incentives to encourage businesses as the CNMI has not had any new hotel for the past 10 years. However, he said the Legislature is apparently more inclined to pass HB 12-199, a similar measure known as Tourism Development Act.
While the idea is commendable, MVA Board Chair Dave M. Sablan said the finance committee should now begin looking at how it will affect the budget of the tourism agency when its share of the room rate tax is cut.
The Hotel Association of Northern Mariana Islands has thrown its support to HB 12-199 since it will offer tax abatement/rebate to tourism oriented businesses in the CNMI.
In seeking to establish incentives, House Speaker Benigno R. Fitial identified the businesses covered by the bill and the amount of minimum investment needed for the governor to issue a Qualifying Certificate to businesses. Investments in theme restaurant, water park and aquarium should have minimum capital of $1 million while expansions of these businesses should not be lower than $500,000.
