Tax rebate is still taxable, says Crisostimo

Sen. Luis Crisostimo is trying to sell the idea that tax rebate and refunds, among others, should still be subjected to taxes.

“If you give me $100 [of your income] and I give you back $85, isn’t the $85 still part of your gross income and is therefore taxable?” he asked.

Crisostimo raised the issue as the Senate discussed and passed during yesterday’s session a bill that provides tools—such as subpoena authority—that would empower the CNMI’s Revenue and Taxation Division in collecting taxes.

Crisostimo opposed the bill, saying it contains “lots of technicalities.”

“This bill brings great concern to me because it changes the composition of almost all taxes,” said Crisostimo before the passage of the measure.

He argued that, although people pay taxes, what is given back as rebate is not a taxed income. “Yes, they [taxpayers] paid but they also receive most of it back,” he said.

Sen. Joseph Mendiola said that rebates are already taxed based on the gross income.

In an interview, Crisostimo said that the government would generate more taxes if rebates or refunds are taxed. If this cannot be done, then he said the government should just let go of “borrowing” taxpayers money.

“It’s costly. The government is spending so much in administrative costs—in processing, preparing the checks, etc.,” he said. “What happens is that the government takes but it gives it back. Why take it in the first place?”
Besides the rebate and refund issues, he said, other items that need to be looked at are the nonresident fees, and land compensation.

Despite his opposition, the Senate passed the bill, 8-1.

Senate minority leader Pete Reyes, who also spoke on record clarifying that the bill’s passage would not result in any tax increases, said that Crisostimo’s argument makes “very good sense” but this should be tackled at a different time.

Reyes, together with other members of the Senate, noted the importance of the immediate passage of the bill, which they said would “arm Revenue and Taxation with needed weapons” to effectively collect taxes.

With improved collection methods, Sen. Diego M. Songao said the government would see increased tax collection.

Tax experts believe that the measure contains provisions that would plug up loopholes in the tax system.

House Bill 14-180 aims to provide a detailed administrative provision necessary for the application and enforcement of general revenue and taxation laws, including liens, levies, examinations, and summons.