Fast-tracked review of tax amnesty bill eyed

The House of Representatives on Friday transferred to the Committee on Ways and Means the review of a proposed measure that would give delinquent taxpayers a 90-day relief on the filing of their derelict returns.

House Bill 12-345 gives remiss taxpayers the opportunity to pay their liabilities to the CNMI government without penalties within 90 days.

The bill’s proponent, Floor Leader Oscar M. Babauta, said transfer of the proposed measure’s review from the Judiciary and Governmental Operations to the Committee on Ways and Means would facilitate its prompt passage.

Mr. Babauta said the proposed measure has bright potentials to refill the government’s depleting coffers because it would encourage delinquent taxpayers to come out and settle their overdue obligations to the Commonwealth.

House Speaker Benigno R. Fitial mentioned the need to immediately institute measures that would help replenish government coffers, as he agreed to toss HB 12-345 to the committee of Rep. Antonio Camacho.

The CNMI tax system depends on the voluntary compliance of taxpayers, thus, putting the entire responsibility on accurate and timely reporting of tax liabilities to the discretion of taxpayers.

Unfavorable economic conditions in the CNMI over the last several years have caused tremendous hardship on local businesses and residents, thereby making it difficult for taxpayers to willingly step forward and address their obligations.

“Some taxpayers fell off the ax rolls and others have never been included in the tax rolls. Although the CNMI could pursue more vigorous enforcement of its tax laws, such action would require the expenditure of scarce resources,” the bill reads.

Mr. Babauta said a better alternative is to bring taxpayers into compliance through an incentive program called for by his proposed measure on a 90-day relief.

An amnesty program would be more cost effective for the government because taxpayers would be allowed to voluntarily come forward to comply with tax laws, he pointed out.

Amnesty programs usually result in accelerated collection of overdue tax revenues to the government, although the program’s primary objective is to bring taxpayers back into compliance.

Mr. Babauta said his bill would pave the road for the CNMI government to recover more than $30 million in unpaid taxes, which could go a long way in helping the Commonwealth restart its economic development programs.

The House of Representatives has also been laying the ground work for the creation of a body of finance experts that will be tasked to review and draw up recommendations to change the existing CNMI tax system.

Mr. Fitial earlier cited the need to institute measures that would simplify the current personal and business tax system in the Northern Marianas which, he said, is too complex and complicated.

Mr. Fitial’s proposed flat tax rate will replace several duties imposed by the government on businesses and individual taxpayers that include excise and earning taxes, as well as Chapter 2 and Chapter 7.

The House Speaker said the draft tax code legislation being worked out by the lower chamber as spearheaded by his office will be patterned after the Hong Kong tax system.