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Last updateThu, 19 Jul 2018 12am







    Tuesday, July 17, 2018-11:28:10P.M.






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Propst to propose additional tax on Saipan casino

ASIDE from the business gross revenue tax, Imperial Pacific International should also pay a gross gaming revenue tax for its Saipan casino, Rep. Edwin Propst said.

Speaking before the Rotary Club of Saipan on Tuesday, Propst disclosed plans to launch an initiative that would propose the imposition of a 10 percent gross gaming revenue tax on the casino.

“We will go through the painstaking and long process of an initiative petition,” he added.

In the past days, he said he has “talked with hundreds of community members and an overwhelming majority of them would support such a tax.”

Propst said casino tax proposals through legislative process often get stalled in the House Representatives.

He noted that House Minority Leader Edmund Villagomez’s bill proposing a 10-percent gross gaming revenue tax on the Saipan casino never made it out of committee.

Earlier this year, Vice Speaker Janet Maratita introduced a similar bill that proposed a 5-percent tax on casino. “That was nine months ago, and it still hasn’t made it out of committee,” Propst added.

An initiative petition may be the only realistic option, he said.

The CNMI Constitution allows the enactment of laws through people’s initiative.

“An initiative petition shall contain the full text of the proposed law. If the petition proposes a general law for the commonwealth, the petition shall be signed by at least 25 percent of the persons qualified to vote in the commonwealth….”

An initiative petition “shall be filed with the attorney general for certification that the requirements… have been met.”

An initiative petition that proposes a general law for the commonwealth “shall become law if approved by two-thirds of the votes cast by persons qualified to vote in the commonwealth.”

Propst said some lawmakers who do not support an additional tax on the casino believe that “now is not the right time, and that we have to let them finish the hotel first — these are among the reasons they come up with.”

He said IPI has recorded close to $3 billion in bets and if the CNMI had imposed a 10 percent gross revenue tax, “the government would have collected $300 million in additional revenue.”

Propst cited Macau as an example of a casino industry that can be “effectively taxed.”

He said Macau’s gross gaming revenue tax is 39 percent, adding that “its government’s coffers are so large that it could operate for the next several years without collecting taxes.”

A special administrative region of China, Macau has a population of over 650,000 compared to the CNMI’s over 50,000. In 2016, Macau recorded 30.95 million tourists. The CNMI had over 500,000 tourists in FY 2016.

According to Wikipedia, gambling in Macau has been legal since the 1850s. Macau is now known as the “gambling capital of the world.” It has 33 casinos and is also considered an offshore financial center, a tax haven, and a free port with no foreign exchange control regimes. In 2016, Macau’s gross domestic product totaled $44.8 billion. The CNMI’s GDP in 2015 was $922 million.

Propst said his “biggest concern is that we don’t know how long the casino will be here because we can’t say it will be forever. We thought the same of the garment industry, and we thought the same of Japanese tourism,” he said.

Propst said the government continues to face issues with insufficient funds and the needs of agencies such as the Commonwealth Healthcare Corp. have not been addressed.

“We do have issues when it comes to spending and living within our means and we’re trying to pay some of our obligations. When you look at things at the surface, they’re looking good, but our challenges are still there, and other agencies desperately need funds.”

Helping the people

Asked for comment, Imperial Pacific said it respects the legislative process and Propst’s desire to help the CNMI and its people.

“Imperial Pacific is here to help the CNMI and its people as well and has done so in many ways during its short existence in the CNMI,” it said.

To date, IPI said it has already infused over $500 million into the local economy, “the largest economic contribution made by a single investor in the CNMI.”

Imperial Pacific International said it contributed $201.6 million directly in combined payments of the business gross revenue tax, corporate income tax, excise tax, casino license fees, the Commonwealth Casino Commission operating fund, donations and payroll withholding tax.

In addition, IPI said it has spent $350 million on hotel-casino construction in Garapan, and will invest more toward the completion of the facility.

“Imperial Pacific International respectfully cautions Rep. Ed Propst to fully understand the effect on Imperial Pacific International prior to creating laws that target the casino gaming industry and affect the investment environment in the CNMI.

“Given the company’s infant state, Imperial Pacific International requires the full support of the CNMI and the Legislature.”

IPI said the current tax structure will allow its business to grow which will in turn provide more long-term benefits to the CNMI.

“Imperial Pacific International strongly believes that the CNMI government’s goal of establishing an ideal investment environment can only be achieved with the support of all stakeholders,” IPI added.