Another tax increase for employers

Amazing! Hardly were my words put in print (Saipan Tribune, Letter to the Editor, Nov. 23, 2006, “Review Your Economics 101,” which will prompt the government to further raise taxes and contribute to more business failures”) and then the very next day on the front page of the Nov. 24, 2006, Saipan Tribune “Tax eyed for hiring alien workers.” It seems we have another misguided, ill-formed, shortsighted government official who skipped Economic 101.

Employers, of which I am one, who employ foreign contract workers already pay exorbitant annual fees for employing them: $275 for registering at Labor, another $25 for the Alien Registration Card, approximately $180 for health exams, health certificates and food handler’s certificates. All that besides paying for their housing, health care, transportation to and from work and duty meals plus $50 for bonding. With everything factored in, this amounts to paying foreign contract workers more than the federal minimum wage of $5.15!

The real problem with hiring local resident workers is not because contract workers cost the employer less; it is because most local resident workers don’t want and won’t take the majority of jobs the foreign contract workers fill. Saipan Tribune editor Jayvee Vallejera points this out very succinctly in his article dated Nov. 24, 2006, “Hidden variables of a minimum wage hike.” His article is very well written and covers the subject in a very thorough and insightful way and all the leaders and decision makers should read and hopefully gain some insight into this very important subject. To impose an additional tax on employers who employ foreign contract workers is very short sighted, unconscionable and will inevitably drive more businesses to close, reduce BGRT the government collects, drive up unemployment, etc., etc., etc., ad infinitum.

As long as I briefly mentioned the minimum wage issue, I might as well address it, too. I, as a long time Saipan foreign contract worker employer, would not object to raising the minimum wage as long as it is done within a reasonable time frame (increments of around .50 cents an hour every six to nine months) and, most importantly, phase out the requirement for employers to provide physical exams for health and food handler certificates, housing, transportation, etc. for its foreign contract workers. If this is done properly then all employees, residents and nonresident alike, will compete on the same playing field. CNMI government, please take note and consider “all” options very carefully.”

Gerald L. Kraus
San Jose, Saipan