Bill to suspend aviation fuel tax passes House

The House of the Representatives unanimously passed last week House Speaker Blas Jonathan T. Attao’s (R-Saipan) bill that seeks to suspend the payment of the aviation fuel tax during a state of significant emergency in the Commonwealth.

House Bill 21-102 will add a new subsection in the statute to indicate the suspension of aviation fuel tax during declared emergencies in the CNMI. The legislation’s intent is to encourage airlines to continue servicing the CNMI.

With an 18-0 vote, the bill now goes to the Senate for action. Reps. Tina Sablan (Ind-Saipan) and Roman Benavente (R-Saipan) were absent during the session. Sablan earlier said the bill should not acted on as there’s no impact analysis done, and no comments from the public and stakeholders.

In an interview last Friday, Attao said he is hoping that the Senate will act favorably on his bill.

As a result of the coronavirus outbreak that originated in Wuhan, China, four airlines have suspended flight to the CNMI.

“If you [deduct] the flights that are coming in, there’s really nothing in collection for aviation tax,” Attao said, adding that the intent of letting go of the aviation tax is to hopefully entice airlines to come in and take advantage of the zero tax on aviation fuel. “Hopefully [we] get the people on the ground, people into restaurants, people into hotels, people into stores,” he said.

Revenue from the aviation fuel tax was about $630,000 from the last fiscal year.

He stressed that the CNMI’s No. 1 priority is to take care of the people and make sure that the coronavirus would not enter the CNMI. That being said, Attao said the CNMI needs tourists from destinations that are not affected by the coronavirus, in order to get some economic activity going and cushion this damage from the virus’ impact.

The speaker said health is the No. 1 priority, but they also have to understand that, as members of the Legislature, they need to find other avenues to make sure that revenues are coming in, economic activity is sustainable, and they’re able to get collections into the coffers.

“Get some good activity going around—that’s the gist behind the legislation,” Attao said.

Reps. Joel C. Camacho (R-Saipan), Luis John DLG Castro (R-Saipan), Marco T. Peter (R-Saipan), John P. Sablan (R-Saipan), and Ralph N. Yumul (R-Saipan) are co-authors of the legislation.

The proposed subsection states that during a period of a declaration of significant emergency affecting air travel to the Commonwealth, and 60 days thereafter, the amount of aviation fuel tax imposed by the statute shall be excluded in the price of aviation fuel sold to international air carriers.

The seller of aviation fuel may apply to the Finance secretary for a tax credit for the amount of the aviation fuel tax excluded from the price of aviation fuel sold to international carriers during the period of the declaration of significant emergency and 60 days after.

While seeing it prudent to protect the health and welfare of the people living and visiting the CNMI, Attao said the request to suspend the arrivals of travelers from mainland China will have an adverse financial effect on the airlines and, in turn, negatively affect the CNMI’s economy.

Gov. Ralph DLG Torres recently declared a significant state of emergency to address the medical issues associated with the coronavirus outbreak and the potential medical threat to the CNMI.

Attao said just as Torres took steps to address the urgent medical issues, his legislation endeavors to mitigate the economic ramifications to travel industry partners and the CNMI.

The speaker said a fuel tax suspension should serve as an incentive for air carriers and mitigate the economic effects resulting from the emergency by reducing the costs of airlines.