Tighter enforcement at Customs yields $3M added revenue

Vigilance and proper enforcement of tax laws—not tax increases—resulted in the Customs Services Division’s collection of at least $3 million in “additional” revenue for the CNMI government in just six months. Just recently, Customs discovered undeclared hard liquor from China, undervalued used cars shipped from Guam, and attempted smuggling into the CNMI of some other items.

Customs director Joe Mafnas, in an interview yesterday at the seaport, said the $3-million increase in customs collection was recorded in the first half of fiscal year 2014 compared to the first half of fiscal year 2013.

The first six months of fiscal year 2014 were from October 2013 to March 2014.

“We are collecting more, and we believe it’s not because there’s increase in import but because of increased enforcement, more aggressive inspections, and changes in the way things are done here,” Mafnas told Saipan Tribune.

Sen. Paul Manglona (Ind-Rota) said this is an example of how the government can realize more revenue just by “fully and properly enforcing tax laws” rather than increasing taxes or imposing new ones.

Manglona himself introduced Senate Bill 18-45 that seeks to have a permanent director for Finance’s Division of Revenue and Taxation so that a person will take ownership and responsibility in enforcing the laws. The bill gives the governor flexibility in determining the Rev&Tax director’s salary to entice applicants.

Customs’ collection of additional $3 million in just half a year is a living example of how full and aggressive enforcement of laws helps realize more revenues for the government which, in turn, would go into providing more or better health, public safety, education, and other services.

“Right now, we are more aggressive in detecting commercial fraud such as undervalued items and smuggled items,” Mafnas said.

Customs is one of the divisions under the Department of Finance.

The Saipan Chamber of Commerce, the largest business organization in the CNMI, has also been asking the government to properly enforce laws, not only tax laws, rather than impose taxes.

$8M to $9M supplemental budget

Gov. Eloy S. Inos separately said yesterday that collections for the first half of 2014 were proving to be better than earlier projected.

This will result in the administration’s submission “soon” to the Legislature of an $8 million to $9 million supplemental budget for fiscal year 2014.

Some $5 million of the supplemental budget will be used to complete the government’s minimum $25 million payment into the retirement settlement trust fund for fiscal year 2014, while the rest will go to the government’s payment of increased health insurance premiums.

The House Ways and Means Committee will also soon start holding hearings to tackle the governor’s $134 million budget submission for fiscal year 2015.

Cars, liquor

Mafnas said a vigilant Customs personnel led to a recent enforcement of proper excise and beautification tax on two used cars shipped from Guam to Saipan.

“The cars were undervalued based on the declaration of the importer because these cars are still new. The Customs personnel checked on the Blue Book value and confirmed that they were undervalued. They were supposed to have higher value and therefore subject to higher tax than what the importer would have wanted,” the Customs director said.

The importer brought in a year 2008 Toyota Scion and valued it at only $1,700. Also brought in was a 2009 Nissan Sentra that the importer declared for a value of $1,900.

“The Blue Book places the value of the Toyota Scion at $6,000, and the Nissan Sentra at $6,600. But the importer reasoned that the cars kind of got into the water so they’re not in good condition but when asked how he’s going to bring the cars from the seaport to his buy-and-sell shop, he said he’s going to drive them so that means they are in working condition. They were assessed the proper tax,” he said.

Customs also detected some weeks ago 15 cases of hard liquor from China that were relabeled as “cooking wine” so that they would be assessed a lower tax rate. Customs assessed the proper tax on the imported items.

Just this Wednesday, Customs also confiscated some 40 pieces of counterfeit Burberry, Coach, and Lacoste women’s wallets and purses shipped from the Philippines. The importer was fined $500, which was immediately paid. Customs will be destroying the counterfeit items, which would have raked in $14,100 if they were sold as genuine products.