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No to reduced rebates!
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Posted on Jan 05 2006
The CNMI economy is not doing well and we might face even more difficult times if more garment factories close in 2006-2007. I recently read a news article where an outgoing member of the Babauta administration suggested the Legislature ought to raise taxes by lowering the rebate from 90 percent to 25 percent. That would be a very bad idea. It would triple the taxes for many small business people and retirees. A tax raise that drives people out of business decreases government revenue, it doesn’t raise them.
Without exception, countries with strong economies depend upon small businesses to drive their economy. The engine that drives the U.S. economy is small business. About 80 percent of all private sector employees—and therefore the great bulk of U.S. tax revenues—come from small businesses, not large conglomerates.
If the CNMI economy is going to grow and prosper we need to provide incentives for new business and encourage existing businesses to grow. A reduction in the rebate, the major incentive for small business, would be a disincentive for growth or new investment. Raising taxes in a declining economy is exactly the opposite of what our government should do. It will, in my view, harm the economy and retard any hope we have for growth.
What message would we be sending? “Please, new businesses, come to the CNMI, and as an incentive we have just doubled or tripled your taxes!”
I believed Ben Fitial when he promised in his campaign for governor that he would not raise taxes and I know he will keep that promise because he understands how suicidal a tax increase would be to his hopes to revive our economy.
Robert J. O’Connor
Susupe, Saipan
