Debate on flat tax system

At Issue: The idea of a flat tax system being eyed by policy-makers to replace an arcane tax system.

Our View: Such proposal merits review to simplify the arcane tax system now in our books for 22 years.

Speaker Benigno R. Fitial was a consultant in the first NMI legislature in 1978 when the current Mirror Image (IRS) tax system was introduced in the Northern Mariana Islands. Since then, it has never been altered in substantial fashion so it is simplified and made relevant to changing economic conditions. It’s now 22 years since the NMI became a Commonwealth and the arcane tax system needs revisiting forthwith.

Politicians and bureaucrats who came after the tenth year into self-government never had the resolve to tackle a substantive issue that warrants revisiting such as the issue at hand. Their dawdling did nothing but allow for the milking of small businesses who must pay excise tax before the sale of their wares. Why can’t this be based on annual sales and profit? It’s the most reasonable approach to taxation premised on how much a business makes as it closes its books at year-end.

Then there’s the tax rebate aspect of the system that came into review by faint-hearted politicians who treated it with a ten-foot pole even with the full knowledge that revenue generation has plummeted. It called for sacrifice–suspension of a major portion of it–until the economy makes reasonable recovery. But politicians weren’t ready for hard decisions that would be beneficial for the NMI over the long haul. Even the business community was willing to sacrifice, but the politicians who gave the issue the leper treatment, stayed away from it altogether.

The current system definitely requires revisiting for there’s the likelihood that businesses (especially large employers) may be persistent victims of double taxation, a faulty penalty no one deserves to endure as they work 18-hour work days to make a profit. Yes, businesses must pay their dues provided that the means to making a profit isn’t arbitrarily dealt a fatal blow by an arcane tax system such as the one we have in the books today.

Like a critical patient in the ICU, we must review the patient’s prognosis and make sure that he receives the right medicine to make gradual and full recovery. Such is the condition of the local economy and all key players must zero-in on the recommendation that we review the benefits of the proposed flat tax system. Si Yuus Maase`!