Tax Amnesty, Hotel Gambling Bills Passed In CNMI

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House vice-speaker opposes gaming machines aimed at tourists

By Haidee V. Eugenio

SAIPAN, CNMI (Saipan Tribune, May 10, 2013) – Two major revenue-generating bills passed the Northern Marianas House of Representatives late yesterday afternoon-one that provides a tax amnesty until Jan. 1, 2014, instead of until Jan. 1, 2017, as originally proposed, and one that amends the definition of "gambling device" to exclude electronic gaming machines in certain hotels on Saipan, Tinian, and Rota.

These two measures are among the 10 bills that the House passed and six resolutions adopted by the House.

Of the 10 bills passed, three are Senate bills that are now headed to the governor for action.

By a vote of 14-0 with one abstention and five absences, the House passed Rep. Tony Sablan's (IR-Saipan) tax amnesty measure, House Bill 18-28, House Draft 1.

Rep. Felicidad Ogumoro (R-Saipan) said she abstained for "personal reasons." She has a pending small claims [case] before the court.

Sablan, chairman of the House Ways and Means Committee, reiterated that a tax amnesty program is the "most cost-effective" way for the government to collect tax revenue during difficult economic times and one that is "better than writing off" debts to the government.

If this bill becomes law, this would only be the third time that the CNMI government will provide a tax amnesty. They were done in 2001 and 2005.

Under a tax amnesty program, penalties and interests on unpaid or unreported taxes are waived. It allows taxpayers to voluntarily come forward and take action to comply with tax laws.

A committee report recommending the bill's passage said tax amnesty usually results in accelerated collection of overdue tax revenues to the government, although the program's primary goal is to bring taxpayers back into compliance, thus strengthening future revenue collection.

Under the committee-amended bill, the tax amnesty takes effect upon the bill's signing into law and shall remain until Jan. 1, 2014. Sablan's original proposal is to have the amnesty program run until Jan. 1, 2017.

In yesterday's session, Sablan said the Department of Finance's concerns are addressed by the "exclusion" or exemption provision of the bill.

The tax amnesty does not apply to the following: persons against whom a criminal or civil action has been initiated and is pending for any violation of CNMI tax laws or any person being investigated for fraud; any person who has been convicted of tax fraud; any person who source of income is illegal; and any person who fraudulently files a special return under this Act.

The government has "at least" $12 million to $30 million in uncollected taxes based on the Executive Branch’s previous statements to the media.

Sablan’s proposal also waives the penalty for failure to obtain a business license.

Covered under the proposal are all taxes, including withholding taxes and all returns, including deductions, exemptions, and credits erroneously claimed in returns filed for all tax years prior to calendar year 2013.

These include taxes for wages, salary or earnings; gross revenue tax; room, bar and jackpot tax; excise tax; and income and/or tax pursuant to NMTIT.

Gaming machines at hotels

By a vote of 14-1, the House also passed Sablan's House Bill 18-51, HD4, which provides additional gaming entertainment for tourists by amending the definition of gambling device to exclude electronic gaming machines.

This is geared toward tourists from China.

If this revenue-generating bill becomes law, it will allow electronic table games such as poker, roulette, blackjack, craps, big wheel, slot machines, baccarat, pai gow and sic bo, as well as any of their variations or composites.

Vice Speaker Frank Dela Cruz (IR-Saipan) was the only one who gave a resounding "no" to the bill.

Dela Cruz said this is just like any other form of gambling that he does not support.

"I oppose any form of gambling that is not decided by the people of Saipan. This is mainly to entice Chinese tourists. I don't have anything against tourists from China, I welcome them wholeheartedly. But the issue of gaming itself is one that I can't support at this time unless they are decided by voters," Dela Cruz told Saipan Tribune shortly after the session that ended around 5pm.

Dela Cruz said sooner or later, "our people will get their hands on these devices too."

Poker machines, for example, were initially envisioned to target tourists but later catered to residents and barely any tourist plays in poker parlors anymore.

"The social impacts will outweigh any economic benefit," Dela Cruz added.

In yesterday's session, Sablan offered three floor amendments, all of which were adopted.

The bill requires that all electronic table games must comply with the latest International Technical Standards set by Global Gaming Laboratories International LLC and SIQ Gaming Laboratories. The latter was added through Sablan's first floor amendment.

Sablan's second amendment has to do with temporary operation of electronic gaming machines at an offsite location owing to the current shortage of hotel rooms on Saipan and the time involved to build a hotel.

It said anyone wishing to operate electronic gaming machines may commence interim operations at an offsite location upon posting a $5 million construction bond. This bond serves as a guarantee that construction of a hotel with no less than 100 rooms will commence within 24 months of the bond's posting. The hotel is also supposed to be completed and operating within 36 months of the bond's posting.

After the hotel construction is completed, the interim operation ceases and all electronic table games will be housed at the hotel.

Sablan's third floor amendment has to do with the definition of hotel or resort where electronic table games are allowed. From 200 or more rooms, a qualified hotel or resort should only have at least 100 rooms. They could also have fewer than 100 rooms so long as the hotel is attached to a golf course.

Another bill still under committee review proposes casino gaming on Saipan.

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