HOUSE Minority Leader Angel A. Demapan was the guest speaker of the Rotary Club of Saipan’s meeting Tuesday at the Hyatt Regency Saipan’s Giovanni’s Restaurant.
He talked about House Bill 22-106, which he introduced during a House session last week.
The measure proposes to impose, each month, a tax equivalent to 15% of the gross rental or gross rental proceeds derived from transient accommodations or BnBs — bed and breakfast establishments.
The bill would also require the transient accommodation broker, travel agency, and tour packager to pay a tax equivalent to 15% of their gross income.
Demapan said his bill would “modernize” the current hotel occupancy tax system “with a fresh and updated tax structure that increases government revenue and bolsters fairness among accommodation providers in the CNMI.”
He said the bill calls for “greater accountability” in the tourism industry.
The Division of Revenue and Taxation has a list of licensed BnBs on island, but Demapan said that right now, there is no registration system specifically for these establishments.
H.B. 22-106 would create a registration system and impose a $5 fee on each registration of transient accommodations with one to five units; and $15 on each registration of transient accommodations with six or more units.
Demapan said several years ago, the CNMI government started seeing online advertisements for short-term rentals of apartments and guesthouses in residential communities.
“As short-term rentals of untraditional accommodations, such as apartments and guesthouses for tourists and transient occupants rapidly increased, the emerging industry disrupted the housing markets and led to increased prices for long-term rentals for our residents,” Demapan said.
“Now, there’s a likely chance that we live right next door to a BnB or guesthouse, which raises another concern: the intended use of property in residentially zoned areas. These areas were not and are not intended for tourism or hotel-like businesses. Because of this, many of our once peaceful and quiet residential neighborhoods are slowly becoming small business districts. Where we once saw young children playing in the yards, we now see a variety of rented vehicles and even visitors on foot tugging their luggage trying to locate the guesthouse they booked online,” Demapan added.
He said there’s also the issue of tax compliance.
H.B. 22-106 would impose the following penalties on violators:
• $500 per day, for the first violation for which a citation is issued.
• $1,000 per day, for the second violation for which a citation is issued.
• $5,000 per day, for the third violation and any subsequent violation for which citation is issued.
“Our current hotel occupancy tax system was established before the explosion of online hosting platforms and it no longer provides a safe and fair system for taxpaying businesses in the Marianas. Is this fair to everyone? Doesn’t sound fair at all,” he said.
House Minority Leader Angel A. Demapan speaks before the members of the Rotary Club of Saipan at the Hyatt Regency Saipan’s Giovanni’s Restaurant on Tuesday. Also in photo are Rotary Club President Wendell Posadas, left, Secretary Joann Aquino, second right, and Vice President Jessy Loomis, right.
