House clears way for creation of tax body

The House of Representatives yesterday approved legislation proposing the creation of a private sector-led commission tasked to come up with recommendations that will revamp the taxation system in the CNMI.

The Tax Fairness and Review Commission will be comprised of five people — a lawyer, a person holding a master’s degree in Business Administration, the director of the Division of Revenue and Taxation or his representative, and two certified public accountants who are nominated by the Saipan Chamber of Commerce.

According to the bill sponsored by House Speaker Benigno R. Fitial, these members of the group shall have extensive backgrounds in finance, business and, or taxation.

“We are putting our trust in this commission, that they can make the appropriate recommendations for long overdue reform,” it stated.

Under House Bill 12-97 amended by the Ways and Means Committee, the proposed body will have nine months to report its findings and recommendations to the governor and the presiding officers of the Legislature. The members’ term shall expire one year after the measures becomes a law.

While they will not be paid for serving in the commission, the members will be assisted by the Department of Finance to provide administrative and clerical support.

The proposal comes amid efforts by lawmakers to revise the existing tax system used by the Commonwealth, which they believe are not helping the island spur the local economy due to its “confusing and redundant nature.

“We have created a bloated system of administration that lives off the earnings of our hard working citizens. Far too much of the revenues generated through our tax system simply go to pay the tax collectors and administrators, rather than going to meet the legitimate interests of the government,” the bill stated.

The measure now heads to the Senate for action.

Earlier, Mr. Fitial had underscored the need to redo the existing system. noting that putting in place a flat tax rate will several duties imposed by the government on businesses and individual taxpayers.

But he told House members yesterday that the commission will look into other forms of taxation, not just the flat tax system, to see what is the most appropriate for the island. A proposal now under study by the lower house, is expected to mirror the one implemented by the Hong Kong government

The Tenorio administration has been trying to simplify the current taxation system following the economic crisis that battered the CNMI in the past two years. Its plan was intended to enhance revenue collection in light of the shrinking public coffers.