Cigarette tax now up 75 cents a pack

Smokers will start seeing an increase in cigarette costs following Gov. Eloy S. Inos’ signing of a law increasing cigarette tax by 75 cents a pack effective yesterday. After three years, the cigarette tax will increase by another $1 a pack.

The new health and revenue-generating law brings the cigarette tax to $2.75 a pack, up from $2.

What this means to most smokers in the CNMI is that a pack of cigarettes that previously retails for $3.75 could go up to $4.50, and then to $5.50 after the third year.

Arnaldo “Mando” Guban, resident manager of Western Sales Trading Co., the biggest cigarette wholesaler in the CNMI, said yesterday that the impact on cigarette retail prices would be immediate.

He said one carton of cigarettes will now have a total tax of $27.50, up from only $20.

“We will be advising our Guam office of the new law. …In my view, the sale of cigarettes would weaken in the first few weeks or months because of the tax increase but eventually the sales will be back to normal when people have become used to the new prices. That price increase will be somehow balanced by the upcoming minimum wage increase of 50 cents,” Guban told Saipan Tribune.

WSTCO carries the brands Camel, Capri, Kool, Pall Mall and Doral, among other things.

In the presence of lawmakers, Cabinet members and other government officials including Customs Director Joe Mafnas, the governor signed yesterday House Bill 18-118 into Public Law 18-64.

The bill was authored by House floor leader Ralph Demapan (R-Saipan).

In signing the bill, the governor noted that 7 percent of the excise tax collected under this section would be reserved for the solid waste management program.

He also noted that 3 percent of excise taxes collected under this section will be reserved for cancer treatment and programs, and will be deposited into a special account separate from the general fund.

This will be appropriated to provide financial aid to non-profit and governmental organizations that provide patient directed services for the prevention of cancers, its treatment, diagnosis and other services that may be required to access treatment, including but not limited to, off-island transportation and temporary housing.

Inos noted the presence of Commonwealth Cancer Association’s program director Juan L. Babauta at the bill signing.

During the signing, the governor said the cigarette tax hike increase bill was “highly debated” but he said in the end, parties came up with a version that’s reasonable to everyone.

The governor also said 50 percent of all excise taxes collected will be deposited into an account to fund the payment of the government’s share of the Group Health and Life Insurance benefits and for enforcement.

Tax amnesty

The governor signed yesterday a second revenue-generating bill that provides for another tax amnesty period—this time for a 90-day period.

Rep. Tony Sablan’s (Ind-Saipan) House Bill 18-166, House Draft 1, is now Public Law 18-65.

Under the tax amnesty law, taxpayers may request for the waiver of penalty and interest imposed on late-filed tax returns, under-reported income, and delinquent tax liabilities.

This is the fourth tax amnesty program that the CNMI government has established. But Sablan and the governor said it was only because the third one provided was only for a short period of time, from Dec. 4, 2013, to Jan. 1, 2014.

They said when taxpayers flocked to the Division of Tax and Revenue to avail of the tax amnesty, it took the division an additional 10 days to provide the proper documents for filing, which gave the filers some two weeks to take advantage of the program.

The new law provides a tax amnesty period that will expire 90 days after its enactment into law. This means the tax amnesty period will be until mid-December.

Inos, during the signing, said the last tax amnesty program generated close to half a million dollars.

“We don’t know the revenue that will be generated by this new law. But folks out there are waiting,” he said, adding that this is a “very strict” law.