Previous Story
Govt to hike hotel occupancy tax
Administration, HANMI yet to agree if it's 3 or 5 pct. in 2013
Acting governor Eloy S. Inos said the government will be increasing the hotel occupancy tax in 2013 instead of collecting a new $15 fee on transient occupants of hotels and motels that was supposed to start last July 1. The Fitial administration and the Hotel Association of the Northern Mariana Islands have yet to agree, however, on either a 3- or 5-percent tax hike.
Inos said the administration’s plan is to increase the hotel occupancy tax by 5 percent-or from 10 percent to 15 percent-starting in April 2013.
HANMI chair Nick Nishikawa said yesterday that the hotel association is proposing a 3-percent increase in hotel occupancy tax by January 2013, and gradually increase to 5 percent by January 2014.
“HANMI and the government agreed to just increase the hotel occupancy tax instead of collecting the $15 fee. But right now we have different rates. We will be waiting for a final decision from the government,” Nishikawa told Saipan Tribune.
Nishikawa said some hotels tried to collect $15 but this either didn’t sit well with tourists or the hotel themselves didn’t want to inconvenience their guests.
“Some hotels suggested increasing the hotel occupancy tax, which from the accounting point of view, is easier. We are in the service industry so we don’t want to create trouble for our guests. So we started talking with the government,” he said.
Both Inos and Nishikawa conceded that there were confusions and concerns on how to collect the $15 fee, the type of receipt to be issued, as well as a lack of advanced notification to visitors that such a new fee is imposed on hotel/motel transient occupants. These were not included, for example, in hotel or travel agencies’ promotional materials or brochures.
“HANMI fully understands the need to fund MVA [Marianas Visitors Authority] to promote the CNMI but there were concerns about that $15 fee,” Nishikawa said.
Inos said the new fee implementation has been pushed back a few times-initially in January, then April, then July, and now for next year.
“The hotel association and some of the travel agencies are now recommending, because of the time that has elapsed, a change in schedule and structure. All of these scheduling [changes] now have finally caught up with us. For a change like this where the passengers have to ultimately pay for it, those sales brochures and guides and so forth would have to include this in the information packets so that there’s no misrepresentation, deliberate or not, and that the packages accurately reflect the expectations of tourists,” Inos said in an interview.
To effectuate the tax increase, Inos said the Legislature has to first amend both the new $15 tourism/environmental law and the hotel occupancy tax law.
“It’s a simple amendment to the law,” Inos added.
As of yesterday afternoon, the House leadership has yet to receive draft legislation from the administration.
Inos said increasing the hotel occupancy tax and imposing a flat $15 fee will collect about the same amount. The money raised will be used strictly for tourism promotion and will not go into the general fund. From the $15 fee, the government projected a collection of some $6 million to help tourism and environmental programs.
“Increasing the hotel occupancy tax is simpler. The structure is already there. They’re already paying 10 percent, all you got to do is increase it,” he said.
House Speaker Eli Cabrera’s (R-Saipan) bill became Public Law 17-75 only in June. This was the first major revenue-generating bill that became law in the 17th Legislature. Moreover, this only amends two previous versions that were met with concerns by federal and local agencies.
Under the new law, a $15 fee is collected from transients who pay for lodging in a room of a hotel, lodging house, motel, resort motel, apartment, apartment motel, rooming house, condominium, or similar facility in the CNMI. The fee is supposed to be assessed one time for each visit or trip to the CNMI.
Funds derived from the $15 fee will be deposited into a revolving fund administered by the Department of Finance and remitted to MVA. These funds will then be used to build, equip, improve, and maintain projects, agencies, and facilities promoting recreation and tourism.
The two previous pieces of legislation charged a $15 travel fee among tourists from non-U.S. destinations but these were found to be non-compliant with federal laws. The two previous laws required the airlines to collect the fees.
The previous bills also intended to provide incentives to travel agencies that bring in more tourists from Asian countries to the CNMI and charge passengers from these non-U.S. destinations a $15 travel promotion fee.
