Chamber: No to tax rebate removal, biz gross revenue tax hike

The Saipan Chamber of Commerce asked the Legislature on Friday not to remove tax rebate provisions in CNMI tax laws and not to increase the business gross revenue tax by 2 percentage points from 5 percent to 7 percent.

Chamber president Douglas Brennan said the business organization takes the position that “what is good for business is good for the CNMI.”

“Outside of federal funding sources, the business community produces what funds the Legislature appropriates for infrastructure and public services,” Brennan said in a two-page letter to Senate President Paul Manglona (Ind-Rota) and House Speaker Eli Cabrera (R-Saipan).

Manglona said he has yet to read the Chamber’s letter.

Basa, for his part, said his Ways and Means Committee is currently reviewing legislation cutting rebate tax by 20 percent but the panel has yet to decide whether to recommend passage or rejection of the bill.

“But we are also reviewing other revenue-generating bills,” he added.

The proposal to cut tax rebates and increase the BGR tax is purportedly intended to benefit the NMI Retirement Fund, the Commonwealth Healthcare Center, the Marianas Visitors Authority, and to restore 80 work hours biweekly.

Brennan cited four specific reasons for “adamantly opposing” the Legislature’s ideas, specifically in the case of proposed legislation that would provide funding for Fund benefits.

First, retirement benefits are calculated based on years of service and contributions, he said.

“Unfortunately these benefits have not been sufficiently funded. To require the existing business community to fund years of accrued benefits through annual taxes is absurd. The business community of 2012 should not be required to fund benefits that have accrued over 30 years,” Brennan told Manglona and Cabrera.

Second, the Chamber believes that benefits are excessive and should be reduced to a level that the government can afford to pay with the resources at hand.

Third, the rebate provisions of the CNMI tax code are one of the few incentives to attract new business to the CNMI.

“What business is going to come to the CNMI knowing it will immediately have to pay taxes to fund retirement benefits that have accrued for decades?” Brennan asked.

Fourth, the financial health of current businesses in the CNMI is fragile at best.

“Implementation of the above ideas is akin to an increase in taxes of 50-70 percent. Businesses on the cusp will close and other businesses will need to reassess long-term plans for staying in the CNMI. Passage of such ideas into law will decrease total revenues rather than increase them,” the Chamber president said.

Brennan said the Chamber cares greatly for the CNMI and wishes it to prosper. “The above ideas will be catastrophic and will destroy what is left of the CNMI’s economy,” he added.

The Saipan Chamber of Commerce is the largest business organization in the CNMI with some 150 members.