Saipan casino operator Imperial Pacific Holdings International (IPI) is once again facing threats from local politicians about gaming revenue taxes.
On Tuesday, Representative Edwin Propst gave an address to the Rotary Club of Saipan in which he announced plans to launch an initiative petition that would impose a new 10% tax on gaming revenue at IPI’s Imperial Pacific Resort Hotel Saipan.
The Marianas Variety quoted Propst saying that previous efforts to impose a gaming revenue tax on IPI’s operations had stalled in the House of Representatives, with two tax proposals failing to even make it out of committee. As a result, Propst believes the “painstaking and long process of an initiative petition” may be the best chance.
Propst offered no timeline for when his petition might get underway. Under the Commonwealth of the Northern Mariana Islands (CNMI) constitution, an initiative petition proposing a law change must garner the signatures of at least 25% of eligible voters. Assuming that happens, a subsequent vote must be approved by two-thirds of voters.
The 40-year casino exclusivity deal IPI struck with Saipan legislators in 2014 requires the company to pay Business Gross Revenue Tax (BGRT) and an annual license fee, but unlike most casino operators, IPI pays no direct tax on its gaming revenue.
IPI has argued that its overall tax contributions to Saipan are not insubstantial, but legislators requested info from IPI in August in order to ascertain “an in-depth understanding of the financial aspects of the gaming industry.”
In August, IPI reported gross revenue of $933m in the 12 months ending June 30, 82.5% higher than the previous year, while profit rose 9% to just under $117m.
An IPI spokesperson told the Variety that the company had infused over $500m into the local economy, “the largest economic contribution made by a single investor in the CNMI.” IPI said it respects Propst’s good intentions but “respectfully cautions” him that IPI has only just opened its permanent Saipan gaming venue and thus the “infant state” of the business “requires the full support of the CNMI and the legislature.”