Chamber thumbs down Commerce fee increases

The Saipan Chamber of Commerce has asked Gov. Ralph DLG Torres to veto a bill that will increase the fees of the Office of the Registrar of Corporations under the Department of Commerce, saying business owners and entrepreneurs are exhausted and overwhelmed at this time due to the COVID-19 pandemic.

In a letter to Torres, Chamber president Velma M. Palacios urged the governor to veto House Bill 21-19 because of the pandemic, weakened economy, the desperate need to encourage entrepreneurship, and the Department of Finance’s capacity to modernize its technology without raising fees.

“Raising fees for the sake of raising fees, when online technology should make it more cost-effective and efficient to process applications, is demoralizing to our exhausted business owners and overwhelmed entrepreneurs,” said Palacios in the Chamber’s letter to Torres Monday.

Last week, the Senate unanimously approved the bill on first and final reading. All eight senators present voted for its passage.

Rep. Joseph Leepan T. Guerrero (R-Saipan) introduced the bill in February 2019, saying the fees have been stagnant since the enactment of Executive Order 97-03 in 1998. Since then, there has been an influx of businesses in the CNMI, he added.

The proposed new fees are $150 for the filing of the Articles of Organization; $150, Articles of Incorporation; $250, application for reinstatement following administrative dissolution; $250, application for certificate of authority for foreign corporation; $50, application for amended certificate of authority, among other several fees.

Palacios reiterated the Chamber’s previous argument that the best way to create more economic stability for the government is by encouraging entrepreneurship—not discouraging it by raising fees.

“Encouraging entrepreneurship looks like expanding opportunities for businesses to form and decreasing barriers that halter their success,” Palacios said.

Encouraging entrepreneurship, she said, will lead to higher Business Gross Revenue Tax collection, more employment opportunities, and better services for the community.

Palacios said that when the bill first came to House of the Representatives in the spring of 2019, the Chamber worked with the Commerce secretary to find ways to both encourage entrepreneurship while assisting Commerce is moving to an online platform. Palacios said it was promised that the increase in fees for Commerce would be used to modernize the department by moving all filing online by 2022. She said these discussions with the Chamber, Commerce, the House Ways and Means Committee led to the draft of HB 21-19, HS1.

However, Palacios said, the CNMI is now in a vastly different economy than it was in the spring of 2019 when these discussions first arose. “Now more than ever, we need to encourage families to start businesses and for businesses to expand their operations,” she said.

Raising fees in the middle of a pandemic, Palacios said, will result in the reverse intended effect, lowering overall government revenue as more people either illegally operate or avoid starting their own businesses altogether.

“A 50%-150% increase in fees may not seem significant to the government, but for the entrepreneur who is bootstrapping their new business with the hopes for their families, it means a great deal,” she added.

Similar legislation was introduced during the 15th, 16th, and 20th Legislature, but no actions were taken.