By Nazario Rodriguez Jr.
Horizon news staff

Management executives of various hotels, resorts and ‘live aboard’ in Palau have expressed strong opposition to the proposed increase in the rate of hotel occupancy/vessel cabin tax as they enlightened members of the Senate Committee on Ways and Means and Financial Matters on its impact to the industry.
The Committee, chaired by Floor Leader Alan Seid, conducted a public hearing on Wednesday at the Old OEK Building regarding the 11 tax items and eight new others recommended by the 2007 Tax Review Task Force.
Committee members present were Vice Chair Caleb Otto, Santy Asanuma, Hokkons Baules and Yukiwo Dengokl.
Three other members were not present, Joshua Koshiba, Alfonso Diaz and Mlib Tmetuchl, the last two were with the National baseball team that is participating exhibition games in the Philippines.
Representatives from Palau Pacific Resort, Palau Royal Resort, Palasia, Landmark Marina, Papago, Airai View, Palau Plantation, West Plaza and two live aboard operators, Fish n’ Fins and Lesson Two Palau Ltd. have attended the public hearing.
Officials from the Palau Visitors Authority (PVA) were also present to give their views.
Updating on the pending budget bill for Fiscal Year 2008, Seid explained that the national government is in need of funding for several important items that the Senate has to consider before passing the bill, which was already delayed.
These include $1.5 million a year for the maintenance of the Compact Road, $500,000 to $1.5 million per year for the operation and maintenance of the New Capitol; remedy the negative cash out flow on the retirement plan; health insurance and other areas.
"These are the major new costs which needs funds. Within this proposed funding, new taxes are proposed and this hearing is to ask the (hotel) industry comments on the new proposed taxes that affect you," Seid told the hotel managers.
Papago General Manager Douglas Topous said that it has been an experience in other countries that increasing taxes is a disaster.
Instead, Topous said that decreasing taxes would allow them to generate more income.
"The proposed increase tends to discourage the growth of our business. We would like the tax to be reduced at its current level," Topous said.
The current percentage/fee on hotel occupancy tax/vessel cabin tax is 10 percent of net room charge.
The Task Force recommended an additional minimum charge for tour packaging tours of $20 per night or 10 percent of the room charge for non-citizen owned accommodations.
HOD further increased it to $20 percent, which would mean that the rate would total 30 percent.
The Senate took-up the $10 percent increase that the Task Force has recommended.
Landmark Marina’s William Tsung said that although he believes the government needs to impose tax to generate revenue the $30 rate would be very high.
Tsung said $10 fixed per night for hotel room below $100 and 10 percent over $100 would be fair enough as he also recommended for the categorization of the hotels.
Palasia and PRR also expressed the same observations saying that this would give more impact to the smaller hotels like Airai View, whose room rates are as low as $20 per night.
Reacting to these comments, Seid was glad that the public hearing went "very well."
"The committee was able to hear their concerns. The important this is not whether we will pass the budget with the tax but we brought the (hotel) industry into the (political) process because we represent the people and business. They want to be part of the process and we will continue to provide them with the necessary support," Seid explained.
He said that this particular public hearing gave a positive impact on the members of the committee.
"It was not just to understand the tax but to understand the industry. It was very open and relaxed," he said.
However, Seid has said that in the end, it’s up to the committee to decide what to do on the tax proposals.
He said that there is a possibility for a separate bill on these tax proposals and possibility that some few exemptions would be included in the budget bill.
"There is really a need for thorough deliberations and discussions. What is important for everyone is that the spirit of this Budget Bill is to provide a balanced budget.
Seid sees a possible cut in existing services that would be accurately calculated in the next 20 years.