Businesses back new tax rebate plan for investors

The local private sector is urging lawmakers to pass a new tax rebate plan for investors in the Commonwealth.

A bill, sponsored by Rep. Joseph Reyes, proposes to establish an “economic stimulus investment program” to encourage business in the Northern Marianas. Similar to the existing qualifying certificate program, the incentive plan offers tax abatement for new investments.

The proposed legislation will require the Department of Commerce to grant tax relief for new investments of at least $5 million for a one-time period of three years.

The Saipan Chamber of Commerce, the largest business group in the Commonwealth, has called the proposal an “important additional economic tool by which potential investors may look positively on the CNMI.”

Alex Sablan, chairman of the Chamber of Commerce’s government relations committee, said the new incentive program will help the CNMI’s bid to expand its economic base.

However, Sablan said the bill should be amended to remove the sunset clause, which requires the program to terminate after three years. He said that 36 months is too short a period to for startup businesses to recoup its investment. He suggested that the term of the tax relief should be decided relative to the size of the investment.

“I can understand how this may be perceived as a giveaway but we assure you the opportunity and extension provided to new investment will go a long way to improving our reputation as a business friendly paradise and the long term return in expansion, employment, consumption, and the overall multiplier effect provided by new investment will more than make up for the perceived potential losses on both sides of the street of startup investments,” he said.

“We believe [House Bill] 16-172 is a win-win for all,” he added.

The Tinian municipal government and the Tinian Casino Gaming Control Commission echoed the support of the business community. According to Tinian Mayor Jose P. San Nicolas, the government should “continue to explore and put in place incentive programs that will attract fresh investment and development for the CNMI.” For his part, TCGCC chairman Francisco M. Borja said the CNMI needs to sacrifice immediate tax revenue to rebuild the economy.

The bill has also received support from Rota Resort & Country Club, and Bridge Investment Group, which is proposing a multimillion dollar casino resort on Tinian.