Senate president: Tax hike must be analyzed

Senate President Edith DeLeon Guerrero (D-Saipan) says with the CNMI economy’s current situation, whether implementing tax hikes are sound must be analyzed.

Previously, the CNMI administration announced that it has experienced a budget shortfall for the third quarter of 2024.

Gov. Arnold I. Palacios, as a suggestion, urged lawmakers to consider tax hikes to boost revenue collections.

In a statement from Deleon Guerrero to local media in regard to the implementation of tax hikes to boost CNMI’s revenue collections, she said that implementing legislation like this must be carefully analyzed by taking into account the CNMI’s current economic status.

“There are several bills that have been introduced to increase taxes but…let’s look at our economy today. Let’s ask the questions; ‘where do we stand today, financially? Is it sound to impose [tax hikes] in the current market position of the CNMI?’ This has to be studied. This has to be analyzed,” she said.

DeLeon Guerrero explained that the CNMI’s economy is not doing well financially and that should be taken into consideration when tax hike bills are discussed.

“We’re underfunded, our tourist numbers are down, we’re not collecting the revenue as we used to in terms of the number of tourists coming in. You have to go the way the economy is going,” she said.

DeLeon Guerrero also raised the question “why now?” stating that these tax hikes could’ve been introduced during a time when the CNMI’s economy wasn’t in a dire position.

“The question is ‘why weren’t these tax bills introduced when the economy was good?’ Now that the economy is [struggling], you do the opposite. If you impose taxes, the price of goods and services will go up. Businesses may not be able to stay open and if they do, who do they pass that cost to? The consumers. The spending power of people will then go down because the prices of goods and services will go up. There will also be no opportunity for families to save money because everything will go up due to tax increases,” she said.

Ultimately, DeLeon Guerrero expresses that the implementation of tax hikes in this current economy has to be carefully thought out.

According to a previous article on Saipan Tribune, the CNMI saw a revenue shortfall of about $3 million for fiscal year 2024.

Palacios proposed a tax hike stating that although tax hikes are generally not supported, it might be exactly what the CNMI needs to keep essential government services open.

“Nobody supports tax hikes. We haven’t had any adjustments in our tax rates for 30-40 years. It’s a tricky thing, it’s very sensitive because no matter what it is, nobody wants to see a tax hike. But we need to balance the services that needs to be provided. Now, if revenue is not there, we need to cut services and right now I believe we are at the level with essential services where we can’t afford to cut anymore so we have to make those different types of adjustments,” he said.

Palacios said he can only propose the idea, but it must go through the legislative process.

“The proposal is to increase the revenue through changing the [tax] rates. I can only propose that, but it needs to go through the legislative process. If that doesn’t go through, I have to make other adjustments accordingly,” he said.

Edith E. DeLeon Guerrero