MVA: Make B&B customers pay hotel tax

The Marianas Visitor Authority in actuality is not opposed to the operation of bed and breakfast businesses in the Commonwealth. That its customers do not pay the hotel occupancy tax is why MVA is up in arms against the concept.

This was clarified by MVA managing director Chris Concepcion, who said the CNMI definitely need B&Bs because the hotels have been consistently full.

“High occupancy levels push the proliferation of B&Bs throughout Saipan. We like the concept because it’s very popular all over the world,” he said. “The only thing that we have an issue with the B&Bs is the non-payment of the hotel occupancy tax by the customers. By law, they are required to charge customers 15 percent on top of the room rate.”

The 15 percent hotel occupancy tax applies to all members of the Hotel Association of the Mariana Islands.

At the same time, the registration of B&B businesses in the Commonwealth is not significant in number, according to a Zoning Office source who asked not to be identified. “This idea comes from the few number of B&B businesses that come to our office to acquire their zoning permits.”

“We welcome private houses and apartments turned into B&Bs to accommodate people. But they have to pay the hotel occupancy tax, just like the rest of us. They have to do their part of paying taxes,” said HANMI president Gloria Cavanagh.

Enforcing the hotel occupancy tax resides with the Department of Finance. MVA donates 2.5 percent every fiscal year of its budget to the Department of Finance for the enforcement of this law.

“For fiscal year 2018, we are projecting that $398,000, nearly $400,000, will come out of our budget for enforcement. MVA is aware that the Department of Finance is looking at this issue and we are confident that they are on top of it and cracking down on B&B owners that are not complying with the tax,” said Concepcion.

There are estimates that the government is losing millions of dollars because B&Bs’ tax evasion. For MVA, this could affect their marketing efforts and destination enhancement projects.

“MVA’s funding is from the hotel occupancy tax so if they don’t pay the tax, we lose out. That’s why our position is, we like the concept and we think there is a need for it because there are not a lot of hotel rooms but they should comply with the tax laws and it’s only fair,” Concepcion added.

A number of B&Bs apply for business licenses and zoning permits after Tax & Revenue enforcement catches them.

“There are some B&B companies that come to us for permits. But most of them come after the Tax & Revenue people catch them and make them comply with the laws. They come to the Zoning Office after paying tax fees and fines. They apply [for] the permit because they have been found out by the Department of Finance,” the Zoning Office source said.

Concepcion added, “I like the free independent travelers, they look for those kinds of experiences and I do [believe] B&B experience should be a positive one. It allows the community to benefit. Just pay the proper tax. The collection of the occupancy tax has been established in the CNMI a long, long time ago. It should be applied and enforced.”