Govt revenue up by $8M

The government’s revenue increased by $8 million during the first six months of fiscal year compared with the same period last year, according to the Department of Finance.

In a report yesterday, Finance Secretary Fermin M. Atalig said that government revenue as of March 31, 2005, totaled $102.5 million while last year, it only reached $94.4 million.

“We realized an $8-million increase even when the community is concerned about garment decline,” said Atalig during yesterday’s Cabinet meeting at the Governor’s Office.

In terms of garment user fee, he said the reduction has been “minimal” so far.

Garment user fee collected from October 2004 to March 2005 totaled $14.080 million, while during the same period in 2004, the figure was $14.811 million.

“It’s relatively small and manageable so far,” he said.

But he said that austerity measures must continue “because we don’t know what would happen in the next months.”

“While year-to-date collections are well ahead of last year, the potential revenue loss from the garment industry could start to impact overall collections in the last half of fiscal year 2005,” said Atalig.

Although tourism related revenues have been improving, he said, garment revenue losses could offset any gains.

The government receives an average of $30 million in user fee a year. The user fee is a form of tax levied on garment exports.

The government projects a 20-percent decline in revenue from the garment industry in view of the worldwide lifting of trade quotas effective January this year. That lifting has resulted in the closure of at least two garment factories and downsizing of operations by others.

Earlier, the Saipan Garment Manufacturing Association projected that sales would drop by as much as 50 percent this year, which could mean a decrease in user fees by up to $10 million.

The government’s user fee collections last month totaled less than $2 million, the lowest monthly collection so far this year.

The SGMA said the industry contributes about $69.9 million to the government in the form of taxes and fees and an additional $47.3 million in industry spending.

Total contribution to the local economy is estimated to be from $229.3 million to $292.6 million, minus remitted employee salaries, SGMA said.

The SGMA said the federal government could assist Saipan’s garment sector by granting the insular areas treatment equivalent to that of the United States’ free trade partners.

In particular, the SGMA and the local government want the U.S. Congress to amend the U.S. Tariff Code to reduce value-added requirement on garment imports from 50 percent to 30 percent for local manufacturers to avail of duty-free treatment.