More incentives for investors urged

The government has been urged to cook up better incentive packages other than tax breaks to encourage increased business activities in the Northern Marianas, in light of gloomy economic projections.

The Commonwealth Development Authority has suggested that the government share some of the costs in infrastructure like sewer or power supply sources with new investors instead of the developer paying for everything.

CDA said the need to institute an attractive incentive package to particular investments is inevitable, but added that giving them tax breaks should not be on top of the priorities.

There are certain investments that may be given incentives like the government shouldering a portion of the total costs in the construction of sewer lines.

The Saipan Chamber of Commerce has recommended that tax breaks should be made available to investors who would wish to set up manufacturing plants in the CNMI, if the government is really bent at developing industrial zones in the Commonwealth.

Providing tax breaks to investors during the first two years after the business has been set up could be one major attraction.

This, even as some analysts say the present tax system is low enough, adding that there is no reason why the government should give more tax breaks.

However, they said the present tax system in the CNMI is good only if it remains unchanged or without any imposition of new fees or increase in present rates.

But businessmen have pointed out that tax breaks which may be given to investors do not necessary have to be on a long-term basis, since the government can have an option to increase taxes and revenue collection when investments are eventually established.

Even when industries are given initial tax breaks, the government can still generate more revenues from workers’ income taxes and other businesses that may sprawl following the migration of workers that will be needed by factories in the economic zone.

Government officials are eyeing CNMI to become a home to economic zones that will be patterned after the Philippines’ export processing zones.

Gov. Pedro P. Tenorio earlier said efforts to revitalize the economy should start with a change of attitude, getting away from the old idea that potentials of the Commonwealth are limited because it is just a few small, remote islands with few resources.

Major factors that facilitate long-term economic growth include transparent financial markets, well-capitalized and well-regulated banks, free trade, a reliable legal system, stable political and regulatory environment, low taxes and welfare benefits and access to well-educated and well-trained workers. (AR Fajardo)