Tax receipts drop as business sluggish

Local businesses continue to suffer without let-up from the year-long financial upheaval in Asia, pitching in less taxes to the government coffers in October at $8.82 million, or an 11 percent decline from the same period last year, according to the governor’s financial adviser.

While the figure was 21 percent over projections of $7.28 million for that month, the Business Gross Receipts Tax collections still reflect sluggish business activities in the Northern Marianas.

“Although we’re slightly ahead of BGRT projections, we’re still below last year’s,” said Michael S. Sablan, special advisor on finance and budget to Gov. Pedro P. Tenorio, “As we expected, this activity has been on a downside because of the economic slump.”

Excise taxes collected during that month also dropped to $1.12 million from $2.28 million last year, marking a sharp slowdown in retail and wholesale activities as well as reduction in automobile purchases. It also represents a decrease in excise taxes relevant to cigarettes.

According to Sablan, the decline was a clear indication that people are buying less, particularly high-spending Asian tourists whose numbers have thinned since last year because of the region-wide currency crisis.

The downturn in visitor arrivals have forced a number of shops, including high-end retailers, to drop prices by as much as 75 percent to draw buyers, but still find their establishments filled with more salesclerks than shoppers.

A number of stores largely dependent on tourists from Japan and South Korea, two of the mightiest economies in Asia hardest hit by the financial strife, have closed shop due to poor sales.

User fees generated from local garment manufacturers jumped 34 percent from October last year, contributing $3.32 million to the financially-troubled government.

The increase was attributed to the .2 percent raise in user fee passed by the Legislature middle of this year to boost the sagging revenue collections of the government.

User fee is the amount paid by local apparel makers to the local treasury for exporting garment products. It is equivalent to 3.7 percent of the total gross value of the finished garments shipped to the United States.

But overall, the administration is projecting cash collections to go down during Fiscal 1999. Last month, Tenorio adjusted downward the government’s spending limit to $216.75 million because of the anticipated 13.4 percent decrease in revenue collections.