Finance calls for tax reform

Posted on Apr 02 2020

The Department of Finance is recommending a tax reform, on top of its suggested cost-containment measures, following its report of only about $21 million remaining for the CNMI government to use for the rest of the fiscal year.

“The tax system of the Commonwealth should be updated,” Finance Secretary David Atalig stated in the report.

Atalig added that the tax code of the CNMI is antiquated and fails to parallel with the increased cost of government services. “Albeit developed with the intention to attract investment of large conglomerates, combined with abatement programs and incentives, the current structure has not fared well for the CNMI.”

The proposed tax reforms recommendations include the suspension of the Education Tax Credit that is applied to income taxes, the leasehold levy on commercial properties under a foreign leasee, and the development of a tax on remittances, for exports of money that would otherwise circulate throughout the domestic economy.

The CNMI’s economy, as with the rest of the world, is being hit by the lack of tourists as a result of the COVID-19 pandemic. The cessation of some tourism-related businesses, particularly hotels, has resulted in furloughed employees, and with it comes less buying power to help regenerate the local economy.

Atalig, in his report, said that tourism at a standstill will result in unprecedented reductions in tax collections and other revenue-generating activities in government operations and services, thus the department’s projection of a 48% decrease in the fiscal year 2020 budget.

“The Department of Finance realizes that the numbers represent a bleak situation. We fully understand that these figures, as they fall, represent more than that. They represent worry among families in our community, they show opportunity slipping away for a recent graduate or from those who wish to thrive at home,” the report reads.

“We recognize that these projections are not just numbers, but shed light on the concerns of our people, especially those most vulnerable. However, these numbers can change. We are committed to seeing this hardship through so that these figures represent resilience, that once again we see and feel hope throughout our islands,” it adds.

As cost-containment measures, the Department of Finance has suggested, among others, the consolidation and restructuring of government departments, reduction in work hours, prioritization of federally-funded programs, and utilities conservation.

Iva Maurin | Correspondent
Iva Maurin is a communications specialist with environment and community outreach experience in the Philippines and in California. She has a background in graphic arts and is the Saipan Tribune’s community and environment reporter. Contact her at
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