TOURISTS SPENDING LESS Excise tax collection down

Changes in the spending behavior of visitors to the Northern Marianas have caused a significant drop in revenues generated by the CNMI government from the excise taxes of products normally purchased by travelers.

A report prepared by the Central Statistics Division of the commerce department disclosed that the average excise tax quarterly collection fell to $4.9 million in Fiscal Year 1999, from $6.1 million during the previous year.

In 1997, the CNMI government collected an average of $7.3 million in excise taxes per quarter or $29.2 million, higher from the 1996’s figure of $6.25 million every quarter of $25 million for the whole year.

During the first three quarters of 1999, excise tax collection pumped $14.8 million into the government’s coffers, with the April-June collection reaching only $4.8 million.

Government finance managers have projected a 30 percent plunge in excise taxed due to the slumping visitor arrivals into the CNMI. The apparent stabilization of income taxes failed to offset the negative impact of the dwindling excise taxes.

In order to boost revenue collection, the finance department is recommending a 10 percent uniform tax rate, as well as the scrapping of excise tax excluding tobacco, alcohol and personal commodities worth over $1,000.

This proposal was opposed by various sectors for fear that the replacement of sales tax with a flat rate would adversely affect the tourism sector which was then the highest revenue-earner among other local industries.

The Commonwealth’s coffers are not likely to enjoy any increase in excise tax collection following projections by the Japan Airlines that stabilization of the Japanese tourism market is expected to take place by not later than 2001.

According to a recent survey, almost 30 percent of Japanese citizens, mostly older women, do not want to take overseas trips due to mounting concerns about personal security when traveling abroad.

Industry players are concerned about the spending behavior of younger travelers, particularly women, who are no longer taking overseas trips as much as they did in the past.

An analysis of the spending behavior of Japanese travelers noted a dramatic decline from September 1997 to August 1998 among travelers in their early twenties and late forties.

The biggest drop was recorded among women in the 45-49 age bracket at 14 percent, while men of the same age posted a 13.7 percent decline. Overseas trips among women aged 20-24 years went down by 11 percent, while their male counterpart posted 10.6 percent fall.

Studies have also noted a significant change in the travel pattern of young Japanese who now take one overseas trip to merely satisfy their desire to go abroad. Once they fulfill this, they start looking for alternative domestic destinations.

People in their 40s, who mostly comprise the active wage-earners segment in Japan, are scaling down their overseas travels since they are more concerned about their financial obligations that include housing loan settlement, their children’s education and future financial security.

People in their 30s usually show a high percentage of repeat travel but the JAL executive said industry players are worried that they might cut back on their travel due to financial constraints or lack of purpose.

There has also been a sharp decline in group tours funded by organizations and observers predict that there would be no full recovery on this segment even if the Japanese economy returns to normal.