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CNMI struggles to claim $100M in ‘cover over’ tax
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Posted on Jan 25 2005
The CNMI now needs congressional approval for the release of federal tax refunds known as “cover over tax” totaling some $100 million after the U.S. Treasury expressed hesitation to release the funds to the CNMI right away.
Gov. Juan N. Babauta, who discussed the issue with federal officials during his recent trip to Washington D.C., said yesterday that the CNMI would have to work now with Congress in getting this money that is due the Commonwealth.
“We’re working through Congress on that. There’s a little reluctance on the part of the [Bush] administration, the Treasury. Obviously, they don’t want to just release out $100 million. They’re kind of protective with their turf and I don’t blame them. They just want to make sure that they have [the] authority to do it,” said Babauta.
He said the CNMI would have to work with Congress to prompt Treasury to turn over the “cover over” tax to the CNMI.
He cautioned that the amount is a rough estimate and requires a lot of work from the CNMI administration.
As much as possible, he said, “we want to play low key on that because we don’t want to get people’s hopes too high.”
“It’s a very complicated process. It literally would take a lot of my time and a lot of my staff’s time to push this inch by inch in Congress,” he said.
Authorities said that under existing laws, the U.S. government should return to the CNMI taxes paid to the federal government by certain employees and businesses based in the Commonwealth since about 1976.
The administration said that over the years, CNMI soldiers and federal employees in the CNMI have forked out tax obligations that should have been channeled to local coffers. This money is what is referred to as “cover over.”
