Is it too late to save our economy?—Part 1

Basically there are two ways to conqueror a nation. One is through military conquest such as happened in the past to the CNMI and to many other countries. We have had the Spanish period, the German period, the Japanese period, and now the American period. We have survived all of these “occupations.” However, it is the second way that really crushes a country because it saps all desire from its citizens to work. It is also much more subtle in destroying the will of the people to over- come hardships

This other more devastating way to conqueror a nation is through control of its economy. This is what is happening to us today. We are being conquered through economic domination from outside forces. Economic domination control means that a group of people whether foreigners or locals control the flow of money and businesses in that country. As a result the ordinary citizens of the country engage less and less in their economic future. They prefer to let others operate the businesses. It creates a form of dependence on outside forces for economic activity. Let’s examine how this operates in the CNMI’s economic picture.

For the past hour I have been paging through the telephone directory trying to find how many different businesses are local or foreign owned. Sadly, I found that the majority of the businesses are foreign owned with a sprinkling of local ownership. Why should that concern you and me? It should be of great concern to us. Let’s examine a few of the businesses that we should be operating but prefer not to, leaving them to be dominated by foreigners.

There are about 70 beauty shops. I have been told that several of them are owned by residents. Good! But I have to ask: Of those owned by locals, how many of the owners are actual beauticians or barbers? Anybody know? If the nonresident workers were to be sent home how many of these shops would remain open?

Of the more than 70 auto repair and service shops, how many of them outside the auto dealers with repair shops are actually operated by local skilled trained mechanics? Of all the air-conditioning companies operating here, how many are owned and operated by locally trained and skilled owners. I know of one—Torres Refrigeration. Are there any others?

There are over 100 grocery stores including markets. Only a handful is owned by locals such as Carmen Safeway and, of course, Joeten Enterprises. I know that there are a few other stores locally owned, but not more than perhaps five or six. We could keep asking this question about almost any other small businesses in Saipan. The answers would be the same.

I also fully realize that we local people have never been small business owners. Our history shows that we have almost always been land owners who leased the land to foreigners. We are still doing this and as a result are losing, if not already have lost, economic control of our economy. This lack of desire to be a small shop or business owner must change.

When the garment industry was in full swing, taxes were coming in because of import and export duty levied on the material imported and exported. Taxes were levied on about 30,000 garment employees. Thus the budget bubbled around $270 million, give or take. Then when the bubble burst and the garment industry left so did its tax money along with employees’ tax money. Currently there are about 3,000 or less garment workers on island—a drop of 90 percent! Where is the tax base?

When the tourist industry leaned on about 700,000 tourists per year, money flowed both in circulation and in taxes. Now that the tourist industry is around a dubious 400,000 tourists per year, taxes and money have been greatly reduced. But what most of us do not realize about the tourist industry is that many of the optional tours that tourists buy from many tour agents are not being reported as income. The sale is done strictly on a cash basis and no record is kept. This is also a common practice in many other small businesses. The sale is not recorded. As a result hundreds of thousands of dollars monthly that should be collected as gross revenue taxes are not reported as income for tax purposes. Who loses? The government and us.

I have often questioned why this is being allowed to happen. No one seems to want to go after these tax evaders. All I get is a mumbo-jumbo reply. The best answer I got was: “We don’t have the personnel.” I offered to go into the collection business for 5 percent of what I would collect, but was refused. So the drain continues. What a great loss of tax revenue!

The other day the Census reported that 28 percent (4,480 families) of the 16,000 households in the CNMI had an income less than $10,000. Twenty-nine percent (4,640 families) had an income of $10,000 or more but less than $20,000. About 13 percent (2,080 families) had an income of $20,000 or more but less than $30,000. Twenty percent (3,200 families) had an income of $30,000 or more, but less than $60,000. And 10 percent (1,600 families) had an income of $60,000 or more.

If you look at the tax structure base, the high income tax payers are not there. So collection of taxes will remain low. After the government does collect taxes in the mirror image of the United States tax system, anywhere from 75% to 90% will be refunded later. So how much remains for the government as tax income to supply the needs of its people?

At the latest count back in September 2006, there were 21,922 nonresident workers on Saipan. Of these about 5,310 of them were considered skilled workers. Their average earnings were about $3.05 back in 2006. Meanwhile, 1,299 of them were in the construction industry. While 3,014 were in the service industry. How does a government build a tax base on those low wages?

A total of 15,806 unskilled workers were listed. Of this number there were 1,648 private maids earning less than the minimum wages. There were 617 farmers earning the same as maids. The hotel industry had 819 nonresident workers also earning low wages. Please explain where the taxes are to come from when the minimum wage is so low?

There are too few jobs generating cash flow into the local economy. Don’t forget that almost $80 million is given from the United States yearly to the CNMI to prop us up. This is a subsidy to us and not taxable. In plain words this money is a yearly gift of which we do little to earn. Yet many of us complain about the unfairness of the United States towards us.

I don’t understand why there is not a serious debate to raise the minimum wage as soon as possible so that our local people will want to work. Why does our governor keep arguing against raising wages? Why doesn’t he champion the betterment of our people to make a more decent living wage? Why is he so opposed to federalization?

Unless we begin to understand how our economy is affected by using non-resident workers instead of us citizens doing the work ourselves, the economy will never bounce back. Also we must understand that every time we invite foreign investors and do not become a part of that investment project, we become one step closer to dependency on outsiders. To be continued next week.