Senate Vice President Donald M. Manglona, left, speaks, as Sen. Frank Q. Cruz looks on during the Senate’s sine die session on Friday.
BY a vote of 7 to 1, the 23rd Senate, in its “sine die” or final session on Friday, passed an amended version of House Bill 23-120, which would impose a 3% tax on construction project revenues that cost a minimum of $350,000.
Senate President Edith Deleon Guerrero cast the lone dissenting vote while Sen. Dennis James Mendiola was excused.
Unlike a similar bill, House Bill 23-74, which Gov. Arnold I. Palacios vetoed in October 2024, H.B. 23-120, as amended by the Senate, includes language stating that the 3% construction tax would not apply retroactively to project contracts awarded on or before Dec. 31, 2024.
The Senate version of H.B. 23-120 also clarifies that a subcontractor’s revenue is exempt from the 3% construction surtax.
For the most part, however, H.B. 23-120, authored by Speaker Edmund S. Villagomez, has the same intent as H.B. 23-74, which was authored by Rep. Ralph N. Yumul.
H.B. 23-120 now goes back to the 23rd House of Representatives, which is scheduled to hold a session on Tuesday, Jan. 7, 2025.
In vetoing H.B. 23-74, the governor said it “is insufficiently protective of the reliance interests of contractors, which entered into construction contracts prior to the bill’s effective date. Retroactively imposing new taxes on vested contractual interest is unfair and may be unlawful.”
Palacios extended his appreciation to the Legislature for its “diligent work” in crafting H.B. 23-120.
Prior to the roll call vote on Friday, Senate Vice President Donald M. Manglona offered floor amendments to the bill 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.
