Bill levies garment products

A legislative proposal is under way in the House of Representatives seeking to impose a $1.25 fee on each finished garment product in the CNMI, whose proceeds will be set aside for homestead and public education funds.

House Bill 11-362, proposed by Rep. Rosiky Camacho, aims to generate millions of dollars in additional revenues for the financially-troubled government for critical agencies, such as the Public School System and the Northern Marianas College.

But the proposal is expected to draw opposition from garment leaders whose heavily-taxed industry has become the steady source of income for the commonwealth when its major tourism economy continues to suffer in the wake of the Asian financial turmoil.

Under the bill filed this week, each locally-produced shirt, sweater, pants or any apparel merchandise will be assessed a $1.25 fee on top of the 3.7 percent user fees being paid by manufacturers to government coffers.

Proceeds of the fee will go to a revolving fund divided equally to three agencies: the PSS, NMC and the Board of Public Land which has jurisdiction over homestead projects on the island.

Each garment firm will also be required to submit a weekly report on finished products waiting to be shipped to their buyers in the U.S. mainland, while they will have to pay the fee every two weeks.

Although the bill has yet to be tackled by the House of Representatives, a legislator said the proposal may get derailed in a committee review due to its “controversial proposition.”

Nearly $50 million is contributed by the garment sector to the CNMI through direct payment of the user fees and businesses taxes each year, while close to $60 million is also being pumped into local coffers through other contributions.

Last July, the government raised the user fees from 3.5 percent to 3.7 percent to shore up dwindling revenues spawned by the sluggish tourism industry, CNMI’s economic lifeblood.

While garment leaders had balked at the raise, they nonetheless agreed to the proposal in an effort to assist the island government meet is financial obligations.

The Northern Marianas is reeling from its worst crisis in years due to the prolonged recession in Asia, its main source of tourists and investments, that has pulled down visitor arrivals and forced closure of more than 1,000 businesses in the past one and half year.