San Nicolas criticizes Castro’s opinion on tax decentralization
The decentralization of CNMI-wide taxes became a hot topic between Rep. Patrick San Nicolas (R-Tinian) and Rep. Manny Castro (Ind-Saipan) during a recent House special session.
Last June 26, during a House special session, House minority leader San Nicolas introduced House Local Bill 23-55, a measure that would enact a revenue surtax on construction companies on Tinian with revenues of $250,000 or more. Exempted from the bill are revenues derived from the construction of primary residences on Tinian.
In a statement from San Nicolas following the special session, he expressed his profound concerns regarding statements made by Castro allegedly suggesting the decentralization of all Commonwealth-wide taxes, such as excise taxes, to apply only to individual islands like Saipan, Tinian, and Rota, in response to the introduction of House Local Bill 23-55.
“In my opinion, this suggestion is not only impractical but also reflects a profound misunderstanding of the complexities and necessities of our tax system. Rep. Castro’s comments, which seem more aimed at scoring political points than fostering informed debate, undermine the collaborative efforts needed to address our fiscal challenges,” said San Nicolas.
San Nicolas, who has supported House revenue bills introduced by members of the House majority in the past, criticized Castro’s proposal as shortsighted and counterproductive.
“Dismantling the CNMI tax system entirely would create a fragmented and inefficient tax structure that could exacerbate our financial challenges rather than resolve them,” he said.
House Local Bill 23-55, authored by San Nicolas, is a constitutionally and legally authorized proposal designed to generate much-needed local revenue for Tinian, particularly in light of the economic activities related to military construction on the island.
“This bill is a necessary response to the Department of Public Works’ inability to assess a developers’ tax on construction projects on Tinian, which are significantly impacting our infrastructure and community resources. It is not an attempt to undermine the CNMI-wide tax system but rather to complement it by addressing specific local needs,” San Nicolas explained.
San Nicolas emphasized the broader implications of Castro’s suggestion, stating that decentralizing taxes disregards the fiscal stability of the CNMI.
“We must work together to ensure that both local and CNMI-wide measures are implemented in a manner that supports all our islands without compromising the overall fiscal health of the Commonwealth,” he said.
Castro, for his part, told Saipan Tribune, that his statement about House Local Bill 23-55 was not advocating for decentralizing Commonwealth-wide taxes.
“I was merely cautioning Rep. San Nicolas about the dangers of doing so. If we started introducing more tax bills locally it would be detrimental to the Commonwealth as a whole,” he said.
However, as for decentralization, Castro said in some cases, decentralization might be what the CNMI needs.
“Don’t get me wrong, there are some processes and systems that we must decentralize. Our hiring, permitting, and most especially our procurement process should be decentralized. We don’t need 6 to 10 signatories to process a travel authorization (TA), notice of personnel action (NOPA), or even a simple purchase order (PO). Each municipality, cabinet member or expenditure authority should have more autonomy to make decisions that directly impact their program, department, or local government,” he said.
“I believe, as our founders did, that a legitimate government operates only by the consent of the governed and is more efficient and less corrupt when it is limited in its size and scope. Decentralized authority, and the elimination of unnecessary regulations and bureaucracy that helps ensure the government serves the people, and not the other way around,” Castro added.
Patrick H. San Nicolas
Manny Gregory Castro
