SCC says govt overcharging businesses on labor permits

The CNMI government is effectively overcharging businesses up to $7 million a year by imposing a $275 labor permit processing fee, the Saipan Chamber of Commerce said.

In an interview yesterday, Chamber president Alex Sablan said the government stands to generate almost $9 million annually from fees collected for the processing of labor permits of the over 31,000 nonresident workers in the Commonwealth.

On the other hand, Sablan said, the government spends only about $1.4 million to run the Department of Labor’s processing unit.

“Even the entire Labor department’s budget amounts less than $4 million. So even if the processing fee is used to support the whole department, we are still being overcharged by $5 million,” he added.

The business group raised this concern in light of the $50 increase implemented last Aug. 6 to the previously $225 labor processing fee.

In a Nov. 17 letter to Labor secretary Joaquin A. Tenorio and attorney general Pamela S. Brown, Sablan reiterated his group’s request for information that would justify the increase.

“As we stated in our Sept. 13, 2004 letter, it is our understanding that the permit fee of $225 was established to pay for the actual expense of processing entry permits, as well as funding a deportation fund and vocational education for the residents of the CNMI,” Sablan said in the letter.

He added, “We are writing to inquire what new expenses that Department of Labor is now incurring that necessitate an increase in this fee. Unless the increase is justified by new permit processing costs, the increase is in reality a tax, not a fee.”

The Chamber of Commerce also expressed concern about a move by the Governor’s Office to submit an additional $1.5-million revenue projection based on the processing fee increase.

“If the increased fee is necessary to cover the cost of permit processing, we do not understand how it can be offered as ‘additional funds’ in the Governor’s budget,” Sablan said.

Further, he asked Tenorio and Brown to provide specific answers to the following questions:

* What were the calculations used prior to the fee increase implementation that were used to justify the increased fee?

* How many people are employed in the worker permit processing [section of the Labor department]?

* How many people are allocated to particular industry categories (i.e. garment industry)?

* How many hours does it take to process a permit?

* What is the overhead cost?

* What is the total cost of the processing procedure?

During yesterday’s interview, Sablan said the Chamber applauds the administration for making systemic changes to Labor and for its efforts to secure federal funding for Labor’s computerization, which would require less personnel to get the processing work done.

He also recognized that the department currently needs additional personnel.

“But bleeding us dry is not the way to go. It’s discouraging investors and hurting small businesses, which are the backbone of this economy,” he said.