Business gross revenue tax up 4.8%

Indicating a modest recovery of the Northern Marianas economy, the CNMI government reported substantial growth in business gross revenue tax collected during the first eight months of the Fiscal Year 2000 from last year’s figures.

Department of Finance records disclosed a 4.8 percent increase in revenues generated from business gross to $42.7 million during the period covering October 1999 to May 2000, from last year’s $40.8 million.

Mike Sablan, the governor’s special advisor for finance and budget, said the growth in business gross revenue tax collections in comparison to last year’s statistics substantiate an overall improvement in the rally of the CNMI economy.

“Overall, this indicate that the Northern Marianas economy is picking up. We are experiencing consistent growth since October of last year and we continue to monitor revenues on a monthly basis,” he told an interview.

Business analysts said the growth in business gross revenues in the first eight months of FY 2000 may indicate a stronger consumer confidence, following years of holding back on their spending due to financial uncertainties brought about by the economic crisis.

In the last three years, both local and foreign consumers have slowed down on their spending. During that time, tourists, mostly Asians, were spending less because the weaker value of their currency against the United States dollar, while NMI consumers were wary over the stability of their employment.

The apparently stronger consumer confidence also pushed the government’s excise tax collection during the same period by 10.4 percent to $14.4 million from last year’s $13.0 million.

By the end of FY 1999, the Commonwealth’s excise tax collection dropped by over $4 million to $19.9 million from $24.3 million in FY 1998. Still four months to go before the end of the current fiscal year, the CNMI is only about $5 million short at meeting last year’s level.

Officials attribute the dramatic growth in excise tax collection to the Japanese and Korean travelers’ stronger spending power primarily spurred by the recovery of their respective currency’s value against the U.S. dollar.

An analysis of the spending behavior of Japanese travelers noted a dramatic decline from September 1997 to August 1998 among travelers in their early twenties and late forties.

The biggest drop was recorded among women in the 45-49 age bracket at 14 percent, while men of the same age posted a 13.7 percent decline. Overseas trips among women aged 20-24 years went down by 11 percent, while their male counterpart posted 10.6 percent fall.

In FY 1999, the average excise tax quarterly collection fell to $4.9 million from $6.1 million during the previous year, according to government records. In 1997, the CNMI government collected an average of $7.3 million in excise taxes per quarter, higher from the 1996’s figure of $6.25 million every quarter.

Statistics obtained from the Central Statistics Division of the commerce department disclosed a declining trend in the amount of excise tax collected by the finance department beginning 1998.

In order to further boost revenue collection. the finance department is recommending a 10 percent uniform tax rate, as well as the scrapping of excise tax excluding tobacco, alcohol and personal commodities worth over $1,000.

This proposal was opposed by various sectors for fear that the replacement of sales tax with a flat rate would adversely affect the tourism sector which was then the highest revenue-earner among other local industries.