Chamber opposes bill on new tax collection procedure

The Saipan Chamber of Commerce yesterday voiced its concern over a legislative measure that seeks to stringently collect excise taxes for imported commodities before they are cleared by the Division of Customs, saying the bill would not ultimately solve tax delinquencies that previously reached millions of dollars in a year.

With the still unstable economy, the Chamber said the government should give businesses leeway to allow them to pay their excise taxes.

House Bill 14-127 reportedly seeks to amend the law to mandate the collection of excise taxes before the issuance of Customs clearance to solve the perennial problem on timely tax collection.

The Chamber opposed the bill, even as it noted a recent Customs Division report that about $2.7 million of the $19 million in excise tax revenue in Fiscal Year 2002 were unpaid.

“Instead, we request for an extension to be given to businesses to pay the excise tax. We believe that this process would allow businesses, such as wholesalers, to recoup some of their expenses and have the ability to improve the variety of the products offered to the consumers,” the Chamber’s Government relations and Economic Development Committee reported.

Excise taxes are assessed on all imported commodities, including food and beverages, cosmetics, construction materials, jewelry, leather goods, passenger vehicles, perfumes, precious gems, medicine and pharmaceutical products, and toiletries.

The Customs Division earlier reported increased revenue in the second quarter of FY 2004 partly due to strong collections on excise taxes. The division reported that a total of $3.1 million in excise taxes were collected in March this year—an 11 percent climb from the $2.754 million collected in the same month last year.

The March figures bring the total excise tax collections for the second quarter of fiscal year 2004 to $8.94 million, up by a modest $112,630 or 12.75 percent from the $8.831 million raised for the same quarter of fiscal year 2003.

The Chamber, however, batted for stricter collection efforts of excise taxes from new businesses, proposing the revocation of business licenses for failure to pay excise taxes on time.

“We do recommend that new businesses should pay their fees upfront until they have proven their ability to pay for excise tax on time. This could be done through a 90-day provisionary period to new businesses,” the Chamber said.

“But if the excise tax is not paid on time by new or existing businesses, then the business license of these companies should be revoked until such time that they are able to pay the tax,” it added.