‘Tax rebate could be scrapped’

Private citizens, elected officials, and businesses weighed in yesterday on what they describe as a hastily-passed bill allowing casino gaming on Saipan, including scrapping the tax rebate for everyone in the CNMI except for the exclusive Saipan casino license holder. Whether it was plain oversight or not, community members are asking Gov. Eloy S. Inos to carefully consider this and other concerns in deciding the bill’s fate.
The bill, which has yet to be transmitted by the House of Representatives to the governor’s office as of yesterday afternoon, leaves out the tax relief provision specific to the tiered rebate offset amount.

Under current law, for example, taxpayers with $20,000 or less in rebate base gets a rebate of 90 percent of the base amount.

“The bill is basically doing away with the tax rebate, the way the language of the bill is posted…It is not fair that every taxpayer in the CNMI won’t get a rebate anymore, only the casino license holder. It may be an oversight but if it is signed in its present form, it leaves out the language of the tiered rebate,” Saipan Chamber of Commerce president Alex Sablan told Saipan Tribune yesterday.

Sablan said the tax rebate is “one of the last real investment tools to attract investors” in the CNMI.

The 35-page casino bill provides rebate offset amount of 100 percent of the gross gaming revenue to the excusive casino gaming licensee.

Sablan said the Chamber is not opposed to giving incentives to investors, but hopes that it will be done in a manner that is fair to everyone.

A rebate is for tax properly paid and is subsequently returned to the taxpayer under a rebate provision.

Press secretary Angel Demapan, when sought for comment, said the administration does not want to scrap the tax rebate program.

“No, if this is what is written in the bill, that would be a grave concern for the administration,” he said.

The Saipan Chamber of Commerce, the largest business organization in the CNMI with over 150 members, had yet to poll its members about the latest Saipan casino bill when the bill passed late Monday afternoon in the House and early Tuesday night at the Senate.

“The passage happened so quickly; we didn’t have time to poll the members yet on this specific bill,” Sablan added.

Tinian Dynasty

Tom Liu, general manager of Tinian Dynasty Hotel & Casino, the only operating casino in the CNMI, said yesterday they are still reviewing the Saipan casino bill and its possible consequence on the Tinian Dynasty operation.

Despite the surprising passage of the bill at the Senate, Mega Stars Overseas Ltd. will still pursue its expansion plans for Tinian Dynasty.

“Mega Stars is still very much [intent on] continuing with their expansion and development plan for Tinian Dynasty,” Liu said, adding that Dynasty does not want investors to lose confidence as a result of the casino bill.

Hotel renovation at Tinian Dynasty is ongoing, with 28 rooms so far completed. Liu said Tinian Dynasty will also have its March Baccarat Tournament this weekend with 200 entries, the largest turnout in the past 10 years.

Two of three Tinian senators voted yes to the Saipan casino bill: Sens. Frank Borja (Ind-Tinian) and Joaquin Borja (Ind-Tinian).

‘Deliberate or not?’

Sen. Paul Manglona (Ind-Rota), one of the four senators who voted “no” to the bill on Tuesday night, asked the same thing yesterday: “Did they just wipe out the rebate in the Commonwealth?”

Manglona and Sablan’s concerns were echoed by ordinary taxpayers who look forward to their rebates every year.

“If the intention is not to remove the rebate, the bill could have indicated that that section is also unchanged just like what it did with the other provisions. Had we had ample time to review this bill before it was put to a vote, we could have clarified this matter,” Manglona said.

Another section of the bill that raises concern is the tax abatement or tax incentive Qualifying Certificate program.

The bill says the Investment Incentive Act of 2000 or Public Law 12-32, which is the QC program “shall not be applicable to the casino, and shall not be eligible for a qualifying certificate.”

“That sentence is clear. The casino is not qualified for a QC. But if you read further, the bill was written in such a way that basically says all the other projects related to the casino, including the hotel, are qualified for QC,” Manglona said.

The bill requires the exclusive casino license holder to invest a minimum of $2 billion inclusive of the casino and a new hotel with at least 2,000 rooms.

The casino bill states in part, “Notwithstanding any other provision of law, if the casino is part of a larger business or project for which a qualifying certificate is issued under such act, no tax on or derived from the operation or revenue of such casino, including but not limited to concession food and beverage sales within a casino shall be abated or rebated by virtue of such certificate.”

But it does not state that the larger business of which the casino is part of is prohibited from availing of the QC program, Manglona said.

Another businessman said yesterday that signing the bill into law gives a “sweetheart deal” for the would-be exclusive casino license holder.

Manglona and Senate floor leader Ray Yumul (Ind-Saipan), also among the senators that voted “no” to the bill, previously raised concerns on other provisions that they deem flawed and have chilling effects on other businesses such as poker parlors, electronic gaming, and video lottery.

They also cited a losing proposition for the CNMI if it would only require a $15-million-a-year license fee payment from the minimum $2 billion investor in a span of 40 years or 80 years. The senators said the bill’s enactment could result in $10 million or more income lost from poker machines and require general fund appropriation for a commission’s annual operations after the first year.

House Bill 18-179, House Draft 4 is authored by House floor leader Ralph Demapan (Cov-Saipan), with Rep. Felicidad Ogumoro (R-Saipan) as co-sponsor.

Demapan and the governor, along with other lawmakers, met earlier on different occasions with a Hong Kong-based investor that is eyeing “close to $3 billion” tourism investments on Saipan, Tinian, and Rota, inclusive of “2,000 hotel rooms,” villas, and a private medical center.

The casino bill was “reviewed for purposes of introduction only” by House legal counsel John F. Cool, who said yesterday that he didn’t have a chance to review the bill thoroughly before it was voted on by the House. He himself conceded that the bill could use a thorough review. Generally, bills are “reviewed for legal sufficiency” by House counsels.

This is the first time in at least four years that the Senate passed a Saipan casino bill from the House. Saipan voters twice rejected a casino legislative initiative, the last one in 2007.

Senate President Ralph Torres (R-Saipan), who used to oppose casino legislation and preferred a ballot initiative, said that “times have changed” so he voted to pass the casino bill. He was referring to the 25 percent cut in retirees’ pension, the annual payment into the retirement settlement trust fund, the higher health insurance premium and other government obligations.

The administration said the governor would thoroughly review the bill, and there is no guarantee that the bill will be automatically signed into law.

House members and senators who voted against the bill asked for public hearings on the bill and more time for the members to review it before voting on it. But pro-casino lawmakers said a casino bill is not a new concept and public hearings were held on previous bills.

Under the latest bill, the investor must pay a nonrefundable $1 million application fee and partial $30 million license fee payment “within 15 days” of the bill’s signing into law. These specific provisions also led some lawmakers to believe that the bill is tailored for a specific investor, who has long prepared at least $31 million to have an exclusive casino license on Saipan.