BY a vote of 15 to 2, the Saipan and Northern Islands Legislative Delegation on Tuesday passed House Local Bill 23-60, which would impose a 1% tax on construction project revenue in excess of $350,000.
The measure, which now goes to the governor, was authored by Rep. Ralph N. Yumul and co-sponsored by Reps. Vincent S. Aldan, Roman C. Benavente, Angelo A. Camacho, Diego Vincent F. Camacho, Manny Gregory T. Castro, Joseph Flores, Marissa Flores, Malcolm Omar, Denita Yangetmai and John Paul Sablan, the delegation chair.
Senate President Edith Deleon Guerrero and Rep. Thomas John Manglona voted against the bill.
Senate Floor Leader Corina Magofna, Sen. Celina Babauta, Reps. Vicente Camacho and Joseph Flores were excused.
To “mitigate any adverse effects on the end prices that may be passed along to the consumers,” the bill provides “a non-refundable tax credit that shall be available for new taxes imposed pursuant to this bill.”
According to H.L.B. 23-60, the Saipan delegation “acknowledges that an additional tax may increase the costs of construction for commercial projects, possibly residential projects as contractors attempt to pass on the increased costs to consumers.”
The delegation also finds that “there will never be a good time to raise taxes.”
Nevertheless, the local bill would impose an additional 1% tax on yearly gross revenue that is directly derived from construction activities in excess of $350,000.
This tax, however, is inapplicable to the revenue that is directly derived from construction activities that are over $350,000 threshold.
In other words, if a construction activity generates $350,000 or less, this tax will not apply. If a construction contractor generates revenue directly attributable to residential construction, this tax also does not apply.
Moreover, the 1% construction tax does not apply to revenue of construction activities prior to the effective date of the enactment of the measure.
Another construction tax bill, H.B. 23-120, was passed earlier by lawmakers and is now also with the governor. It proposes imposing a 3% tax on construction projects with a $350,000 revenue threshold.
