BY a vote of 18 to 1, the House of Representatives on Tuesday passed the Senate version of House Bill 23-120, which proposes to impose a 3% tax on construction projects with a $350,000 revenue threshold.
Authored by Speaker Edmund S. Villagomez, H.B. 23-120 now goes to the governor.
Rep. Thomas John Manglona cast the lone dissenting vote while Rep. Vicente Camacho was excused.
The bill, supported by Gov. Arnold I. Palacios, would ensure that the 3% construction tax is not applied retroactively to project contracts awarded on or before Dec. 31, 2024. The bill also clarifies that a subcontractor’s revenue is exempted from the surtax.
In his fiscal year 2024 annual report, the governor informed the Legislature that the CNMI government still has over $500 million for infrastructure investments. The amount includes funding from the Federal Emergency Management Agency, the Community Development Block Grant-Disaster Recovery program, and other major federal grants.
The final version of H.B. 23-120 included provisions offered by Senate Vice President Donald M. Manglona to appropriate 20% of the Gross Revenue from the Qualifying Construction Project Account as follows:
1) 2.5% of the construction tax “shall be appropriated each to the First and Second Senatorial Districts” or Rota and Tinian.
2) 15% “shall be appropriated to the Third Senatorial District” or Saipan and the Northern Islands.
In addition, 8% will be allocated for road maintenance, solid waste and environmental protection in the First, Second and Third Senatorial Districts as follows:
1) 15% for the First and Second Senatorial Districts under the expenditure authority of the respective resident department heads of the Department of Public Works on Rota and Tinian.
2) 50% for the Third Senatorial District under the expenditure authority of DPW.
