1 pct. gross revenue surtax eyed

A new local bill proposes an additional 1 percent gross revenue surtax on Saipan, which could roughly translate to 10 cents for every $10.

The existing top gross revenue tax rate is 5 percent.

A 1-percent surtax would be about a 20-percent increase over the current gross revenue tax rate and could produce some $9.2 million in additional revenue for Saipan.

There has been no increase in the gross revenue tax since its inception in 1982.

Rep. Stanley Torres (Ind-Saipan), the bill’s author, said yesterday the projected $9.2 million additional revenue for Saipan would help restore the government’s work hours to 80 biweekly instead of the current 64 hours.

He said the government cannot rely on the casino initiative alone to help restore work hours, save the Retirement Fund, and fund others programs and services.

“I want to put it on the table for discussion. We will seek input from members, the business community, and the general public,” Torres told Saipan Tribune in an interview at his office yesterday.

The Fitial administration projected that the gross revenue tax for fiscal year 2012 alone would generate some $46 million.

“Due to the change in economic conditions over the years, it is reasonable to increase the gross revenue tax. By imposing the increase as local 1-percent surtax, there is greater assurance that the increased revenues will be used to benefit the residents of [Saipan],” Torres states in his House Local Bill 17-74, which he will introduce during Monday’s session.

Douglas Brennan, president of the Saipan Chamber of Commerce, said he has yet to see the new local bill but would like to know where the proposed additional collection would go and whether it would be accounted for.

Brennan said he supports the government going back to 80 hours and having a solid Retirement Fund, among other things, but businesses would like the government to account for every dollar they collect from taxes and fees.

He said the government does not account for a lot of public funds, including those so-called discretionary funds.

“I just don’t see the fiduciary responsibility of the CNMI government,” he said.

Brennan said actual collection could be much less than the projected $9.2 million if businesses that are already struggling to survive to begin with are forced to shut down because of additional taxation and would therefore not be able to pay such a tax.

The Chamber of Commerce, the largest business organization in the CNMI, is generally opposed to additional taxation.

For years, the Chamber has been telling lawmakers that imposing tax and fee increases without plans to cut government employment numbers “is to ask businesses and individual taxpayers to dig deeper into their pockets to allow government to continue employing and spending as usual.”

Brennan has also urged Chamber members to pay particular attention to one particular legislation being reviewed by the Government Relations Committee, House Bill 17-238, which gives the Legislature the authority over utility rates for residential customers.

“If that isn’t enough to scare you into participating in a committee, nothing will,” Brennan said. “I say this because the incredible volume of proposed legislation that gets pumped out is mind numbing, almost as if there was a contest to see who can produce the greatest number of bills, without regard to the quality.”

He said in reality, some of the legislation are good and some are so far “off the wall it is unbelievable.”

“Either way, the more minds SCC can garner to review it and offer suggestions for improvement, the better the result will be,” he said.