Businesses reduce orders

Reacting to the current economic slump, businesses have reduced their orders to ensure lean inventories, resulting in less excise taxes for the government.

Saipan Chamber of Commerce president Charles V. Cepeda said that this trend was noticeable in the excise tax collection during the first six months of fiscal year 2006.

He said the excise tax collection has been under the $2 million level, with the exception of November 2005 and February 2006.

Chamber data showed that in October 2005, excise tax totaled $1.9 million; it was $2.1 million in November, and $1.7 million in December.

In January this year, excise tax collection was further down at $1.6 million.

In February, it was up at $2.1 million, but in March, it went down to $1.8 million.

“It shows the instability as a result of what’s happening around us. Businesses are still in a wait-and-see mode,” said Cepeda.

The excise tax is a government fee imposed on imported goods. It varies, depending on the type of goods.

For instance, an excise tax on a carton of cigarette totals $17.50, $1.75 per pack or 18 cents per stick.

For beer, a $6.75 excise tax is imposed per case.

Excise tax on soda is much less at $2.50 per case.

The Department of Commerce earlier reported a simultaneous drop in revenue sources during the first quarter of the year.

Commerce data said that garment sales plunged by 29 percent compared with the same period last year, while the CNMI business gross revenue went down by 6.7 percent.

Likewise, the government’s general revenues from taxes and fees dropped by 13 percent during the same period.

In its January to March 2006 Economic Indicators report, the Commerce Department said that garment sales totaled $125.8 million. During the same period last year, garment exports were valued at $177.6 million. That’s a drop of $51.8 million.

The government statistics also showed that business gross revenue decreased by 6.7 percent. From $539.4 million during the first quarter of 2005, the figure went down to $503.2 million this year.

The government, meantime, collected $48.68 million in taxes and fees during the first three months this year, which is 13 percent lower than the same period last year.

The decline in revenues is attributed mainly to the abrupt pullout of Japan Airlines in October 2005 and the continued downsizing within the garment industry.