Chamber wants rejection of tax relief suspension bill

The Saipan Chamber of Commerce has asked for the rejection of a bill seeking to suspend tax rebates for calendar year 2009, saying the economy needs more—not less—cash flow in the private sector.

Jim Arenoski, president of the Chamber, said while the group appreciates the government’s desire to generate revenues during these challenging economic times, it is certain that a tax increase imposed when businesses are experiencing declining sales, increased costs, and an uncertain future with regard to both the foreign labor pool and tourism industry would be disastrous.

House Bill 16-170, introduced by Rep. David Apatang, seeks to appropriate funds realized from the tax relief suspension to the Commonwealth Utilities Corp. (70 percent), the Public School System (20 percent), and Northern Marianas College (10 percent).

The bill, however, said if the CNMI government receives cover over tax funds from the federal government during fiscal year 2009, the secretary of the Department of Finance shall remit full tax relief for CY 209.

Arenoski said the bill would significantly and negatively impact individuals in largely the same way it will affect businesses.

“It would increase the taxes and decrease the net income of every family in the Commonwealth. We are unaware of any economic theory that supports the concept of increasing taxes in an effort to combat an economic depression,” said Arenovski in a Jan. 23 letter to Rep. Ray Yumul, chairman of the House Committee on Ways and Means.

HB 16-170 would result in taxpayers earning $20,000 or less each year to pay 10 times what they are currently paying in taxes, said Arenovski.

High-income taxpayers, he added, would see a doubling of their tax liability. Tax revenue from these individuals is an important component of the CNMI’s overall revenue base.

“Those residents would unquestionably move to more convenient locations if the Commonwealth’s tax incentives were removed, which would partially offset the increased income generated by the tax increase,” said Arenovski.

The Chamber issued the two-page position paper after the co-chairs of its Government Relations Committee, Alex Sablan and Mike Johnson, reviewed and discussed the bill.

In December, PSS already expressed opposition to the bill, describing it as “a temporary solution that does not fully address the spectrum of the problem.”

PSS said many people count on their tax relief checks to augment paychecks and use their checks to pay bills, buy groceries and other important tasks, and suspending the entire rebate will create an additional burden for the already financially strapped taxpayers.