Rebate cut pushed

The chair of the powerful House Ways and Means Committee has thrown support behind a recommendation to cut income rebates in the Commonwealth in efforts to finance critical infrastructure development on the island.

Rep. Karl T. Reyes said the current rebate on personal income of up to 90 percent should be reduced to 70 percent, while corporate income rebate should go down from 50 percent to 30 percent.

Millions of dollars in revenues are anticipated to be collected from this drastic measure which he maintained would help raise funds for capital improvement projects, particularly at this time when the government is experiencing its worst financial crisis in decades.

“There will still be rebate, although it will be lesser in value,” Reyes told in an interview, adding this proposal should be studied “seriously” because of its potential impact on the incentives that the CNMI currently offers to residents and investors.

But the representative underscored the need to identify sources of funds for the island’s infrastructure needs, noting that higher taxes have been imposed in other U.S. territories to raise money for their public facilities or CIP.

Guam, for instance, does not have an income rebate system, except for the Qualifying Certificate Program as part of its incentives to attract new investors.

When asked if his committee, which deals with government financial affairs, would consider slashing the rebate percentage in the CNMI, Reyes said he would look into the proposal before coming up with a legislation.

A forthcoming analysis on the CNMI economy has suggested that the government must impose new taxes and cut rebates if it wants to undertake massive infrastructure development in line with its hopes to promote business growth on the island.

Called “An Economic Strategy for the Commonwealth of the Northern Mariana Islands,” the study aims to chart the course of the local economy into the next decade, including potential new industries beyond tourism and garment manufacturing.

The report was based from the findings made during the economic summit held last March on Saipan and attended by various business leaders, government officials and other professionals.

It noted the inadequacy of the existing facilities on the island to complement economic development, saying that the government should begin the process of generating revenues, such as property taxes and sales taxes, for its own infrastructure plan.