The members, which met to review House Bill 16-210, noted that the Department of Commerce suggested making the secretary of commerce a member of the Commonwealth Development Authority board “at least only with respect to the review and approval” of QCs.
But four of the House members present during the meeting — Chairman Joseph C. Reyes, R-Saipan; Vice Chairman Ed T. Salas, R-Saipan, Vice Speaker Joseph P. Deleon Guerrero, R-Saipan; and Rep. Tina Sablan, Ind.-Saipan — said this recommendation defeats the bill’s purpose, which is to remove “politics” from the QC review.
The secretary of commerce works for the governor.
The other member present during the meeting was Rep. Edwin P. Aldan, Covenant-Tinian.
Introduced by Rep. Rosemond B. Santos, R-Saipan, H.B. 16-210 proposes to:
• Remove the authority to approve QCs, including the nature and level of benefits, from the governor to the chairman of the CDA board with the concurrence of the board.
• Create a board of directors for CDA’s economic development division and establish minimum qualifications for board members.
• Include affordable housing or needed facilities as a qualifying investment.
• Impose an annual monitoring fee on beneficiaries.
• Limit the tax abatement and rebate period to 10 years instead of the current 25 years.
• Require quarterly and annual reports from beneficiaries.
• Require beneficiaries to invest a minimum of 25 percent of rebated taxes for a period of not less than five years into certain organizations and/or purposes.
Commerce Secretary Michael J. Ada, in his letter to the committee, urged lawmakers to include a transition provision for existing beneficiaries that were granted the maximum 25-year tax abatement and rebate period.
“[W]e are concerned that changing it now would cause the pullout of existing beneficiaries that have already invested a substantial amount in our commonwealth,” Ada said. “Given the current state of our economy, we believe that such an abrupt change in our laws would escalate the pullout of very much needed investments and paint the CNMI as an unstable locale to invest.”
CDA also submitted its comments regarding the bill.
It said the Saipan Chamber of Commerce was “worried that the repeal and reenactment of the original QC law, or Public Law 12-32, as amended, would again point to instability of laws in the commonwealth. We share this valid concern. However, we believe that amendments to the existing law are necessary for the program to work more effectively.”
The QC program aims to attract new investments by providing them with tax breaks. The QC law was later amended to include existing investors that expanded their businesses in the CNMI.
The House Commerce and Tourism Committee will again meet this week to complete its review of the bill.
Chairman Reyes said he expects more discussions when the bill is finally brought to the House floor.
