Bill granting tax credits to low-income opposed

Legislation seeking tax credits for school expenses by low-income families have drawn objections from the community due to potential constitutional questions and limited benefits to most of the people.

The House Ways and Means Committee is considering inputs and recommendations on HB 12-203 which will provide exemption on certain educational expenses for CNMI taxpayers whose school-age children are recipients of the federal nutrition programs.

Sponsored by Rep. William S. Torres, the measure seeks up to $500 deduction per family from the individual income tax paid for textbooks and other school expenses of each dependent attending public, private or religious elementary and high schools on the islands.

Although a hearing scheduled yesterday was postponed due to lack of participants, the committee earlier had received written comments cautioning lawmakers against enacting the legislation.

Saipan Mayor Jose C. Sablan said the Legislature should avoid passing legislation such as the “Education Expense Exemption Act of 2000” when it could cost the cash-strapped government millions of dollars in revenues.

“I am sure that our government cannot afford administering such benefits,” he wrote in his testimony to Ways and Means chair Rep. Antonio M. Camacho.

“It will encourage our people to expect ‘hand-outs’ from the government, rather than pursuing a hard-earned income… What will happen to the beneficiaries should decide on ceasing such benefits,” asked the mayor.

Mr. Sablan warned legislators that they should minimize passing legislation intended only to benefit low-income families because it would burden the middle-class income earners and all other taxpayers who do not qualify for such incentives.

One of the privately-ran Christian schools echoed his views, noting even middle-class families are in need of assistance from the government regarding education of their children during these economic difficulties.

Tom Allred, administrator of the Calvary Christian Academy, noted families sending their children to private schools would not likely qualify for this tax exemption.

“These people could use help. Some of these… are businessmen, and we know you understand how difficult it is for them in this economic recession,” he wrote in his letter.

Mr. Allred told the Ways and Means Committee they prefer a piece of legislation that would benefit more people on the islands.

The Attorney General’s Office, on the other hand, raised constitutional problems over the proposal, citing provisions that violate the “Religion Clauses” of both the U.S. and NMI Constitutions.

Assistant Attorney General Elliot A. Sattler cautioned the House in passing the bill as it could court judicial challenge that would only cost the government at least half-a-million dollars to fight the possible lawsuit.

“The Ways and Means Committee should carefully review this proposal taking advantage of the legal expertise of both legislative legal counsel and legal counsel for BOE/PSS to determine whether enactment of this proposal is in the best interest of the residents,” he said.