THE Senate Fiscal Affairs Committee last week endorsed substitute versions of two House tax measures.
The committee report on House Bill 23-7, which defines taxable tobacco products and vape, and H.B. 23-74, which imposes a 3% tax on construction activities, will be submitted to the full Senate in its next session.
The committee chair, Senate Vice President Donald Manglona, said they have conducted public hearings on Saipan, Tinian and Rota and listened to the concerns raised by members of the community.
The Senate committee’s version of H.B. 23-7 includes as a taxable product the electronic nicotine delivery system, popularly known as vape. It defines vape as “a non-combustible product that may contain nicotine, flavor or other chemicals and that uses a heating element, power source, electronic circuit, or other electronic, chemical, or mechanical means, regardless of shape or size, to produce vapor from a solution or other substance.”
This includes an electronic cigarette, an electronic cigar, an electronic cigarillo, an electronic pipe, an electronic hookah, a vaping device or similar product or device and a vapor cartridge or other container that may contain nicotine in a solution or other form that is intended to be used with, or in an electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, vaping device or similar product or device.
The Senate committee also added a provision in H.B. 23-7 to appropriate the excise tax collection on vape products as follows:
• 50% to the Health Network Program account to be used for airfare, hotel expenses and subsistence allowance of patients; and,
• 50% to pay the non-federal match share of Medicaid in the Commonwealth.
Sen. Dennis Mendiola cast the lone dissenting vote on H.B. 23-7. He said he agrees to the inclusion of vape as a taxable product, but he disagrees with a tax hike.
As for H.B. 23-74, the committee increased to $350,000 from $250,000 the expenditure threshold of construction activities that will be taxed 3%, and earmarks 2% or $300,000 of the tax collections, whichever is less, to the Division of Revenue and Taxation.
Prior to the adoption of the committee report, Senate Floor Leader Corina Magofna said “there will be no double taxation imposed on the construction tax and the 3% tax will be imposed solely on general contractors and will not be passed on to subcontractors.”
Manglona said his committee worked closely with the Division of Revenue and Taxation to identify the “work around” so that the measure would be imposed one time, and only on the general contractors.
He also supports the idea of earmarking a portion of the construction tax collections to Revenue and Taxation to ensure that the proper filing of such taxes based on the project amount are being met, and that subcontractors will not be affected in any way.
Also present in the committee meeting were Sens. Celina Babauta and Jude U. Hofschneider.
