Amnesty for derelict taxpayers proposed

In an effort to recoup more than $30 million in unpaid taxes, House Floor Leader Rep. Oscar M. Babauta yesterday introduced a bill giving delinquent companies’ debts a three-month reprieve from accumulating interest and penalty.

The 90-day amnesty for delinquent taxpayers will give companies a chance to come out clean and the government an opportunity to collect badly-needed money, the lawmaker said.

The collected taxes would go a long way in helping the government restart its economic development programs stalled because of lack of funding.

A replenished budget would also mean more scholarships for college students, hiring of more public school teachers, improved school facilities and better public infrastructure in general.

Patterned after the Nonresident Arrears Program, the plan being proposed would allow businesses to apply to the Department of Finance, or ultimately to whatever government body assigned, to process the program.

Mr. Babauta also added that with the continued economic crisis the CNMI has been experiencing, the bill for an amnesty for delinquent taxpayers becomes doubly important and doesn’t come at a better time.

The more than $30 million in delinquent payments is on top of the $5 million or more already being lost by government every year from businesses that operate without the proper licenses and permits.

It has been estimated that about 2,5000 establishments in the CNMI have not renewed their business licenses.

The House of Representatives has also been laying the ground work for the creation of a body of finance experts that will be tasked to review and draw up recommendations to change the existing CNMI tax system.

Speaker Ben Fitial earlier cited the need to institute measures that would simplify the current personal and business tax system in the Northern Marianas which, he said, is too complex and complicated.

He said, however, that the lower house would carefully approach any element of tax reform to ensure the government continues to generate the necessary level of revenues needed to efficiently carry out essential community and public services.

Discussions are now underway between the Speaker and the members of the lower house, in consultation with legal and finance experts, for the drafting of legislation that will clear the road for the institution of a flat tax rate.

Mr. Fitial’s proposed flat tax rate will replace several duties imposed by the government on businesses and individual taxpayers that include excise and earning taxes, as well as Chapter 2 and Chapter 7.

The House Speaker said the draft tax code legislation being worked out by the lower chamber as spearheaded by his office will be patterned after the Hong Kong tax system.

The Tenorio Administration has repeatedly bared plans to simplify the current CNMI tax system. In fact, Gov. Pedro P. Tenorio previously discussed the possibility of a tax reform with members of the 11th CNMI Legislature and his financial managers.

The governor’s call for changes in the CNMI tax system was driven by the worsening economic condition which has been forcing the government to institute measures that would enhance revenue collection in light of the severe depletion of public resources.