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Taxing ’em

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Lawmakers in Puerto Rico are debating a new and highly contentious bill that aims to impose a fine of up to $800 on parents of obese children in an attempt to curb obesity. Under the bill, schools would identify children who are obese and then recommend diet and exercise programs for them to lose weight. If there is no significant weight loss months later, parents can be fined $500 to $800.

The CNMI, just like Puerto Rico, has seen a high rate of obesity among children and adults. They say desperate times call for desperate measures, but the CNMI has not gone as far as holding parents accountable for their children’s waistlines.

However, in 2012, a bill was introduced in the CNMI House of Representatives levying a “fat” and “sweet” tax of 5 percent on at least 30 types of foods, drinks and tobacco products that the author considered “unhealthy.” The bill’s goals were two-fold: Curb obesity and generate revenue to help repay the only government hospital’s loans.

Numerous surveys and studies in the last decade alone confirm what the CNMI public already knows—that obesity is prevalent. In 2007, the Department of Public Health (now the Commonwealth Healthcare Corp.) said 70 percent of adults in the CNMI are either overweight or obese.

A 2013 Youth Risk Behavior Survey by the Public School System found out that the percentage of students who are overweight slightly increased from 16.7 percent in the 2011 survey to 16.8 percent two years later.

Public health programs have been launched to stem obesity and promote a healthy lifestyle such as the Let’s Move Marianas campaign and just recently, a program that recognizes restaurants on Saipan for serving healthy food. But it takes a lot more from the government and the general public to really make a dent on the weight problem and associated risks.

Rep. Felicidad Ogumoro’s “fat and sweet tax” bill during the 17th Legislature generated discussion and drew differing views from the health sector, the business sector and the general public, but it didn’t pass the Legislature. The way the bill was written was problematic and not well thought out to begin with, particularly on the kinds of food deemed “unhealthy” including candies with coconuts, chocolates, ice cream and edible ice, malt beer, wine, soft drinks, animal and vegetable fats, peanut butter and paste and luncheon meat.

Taxing animal fats, for example, would include taxing every meat product brought into the CNMI, such as chicken leg quarters and ribs as all meats contain fat, a registered dietitian once said. This also would tax imported fresh or canned fish.

While health advocates themselves have reservations about the fat and sweet tax bill, they believe that the bill can still attain its public health goal by further reviewing the types of food and drinks it considers unhealthy and by taking public comments into consideration, among other things.

The Saipan Chamber of Commerce in particular urged the Legislature at the time to reduce its size and spending by 50 percent and divert those funds to the Commonwealth Healthcare Corp. rather than imposing more taxes.

But two years later, the CNMI succeeded in gradually increasing cigarette tax over a three-year period to help curb smoking and raise funds for cancer treatment and related programs. Even the cigarette importers knew that smokers would still smoke despite the higher tax, although it would take some time to get used to the idea of paying more for the same habit.

Of the 36 bills introduced so far by the 19th Legislature, only at least one has to do with “health and revenue-generation,” although some could argue that Sen. Sixto Igisomar’s (R-Saipan) bill to legalize marijuana use for medicinal purposes does not really address a pressing health issue.

Just like obesity and smoking, betel nut chewing is yet another public health issue that’s taking a lifetime to fully address. Recent suggestions from the public include outlawing betel nut chewing. It takes a really strong political will and a tremendous public support to ban the chewing of betel nuts. But a good start perhaps is taxing betel nut, similar to taxing cigarettes and alcohol.

As far as other revenue-generating bills are concerned, House floor leader George Camacho (R-Saipan) revived his bill from the 17th Legislature which aims to tax laptops and other computers.

Camacho’s House Bill 19-5 amends an existing law to remove the excise tax exemption for personal and office computers worth less than $5,000, and authorizes the Department of Finance secretary to classify new products for taxation purposes.

The author says the current tax exemption for these computers was originally intended to keep their prices affordable for consumers. But the daily use of computers has become a part of daily lives “that the abundance of such technology has allowed a significant reduction in costs compared to what it used to be.” The author points out that the CNMI has been losing out on revenues that could have been generated from computer sales.

The 17th House passed Camacho’s original bill but the 17th Senate’s amendment to include a provision exempting tourists from the 30-percent gaming machine jackpot tax for winnings in licensed casinos didn’t sit well with the House at the time.

There is no telling yet whether Camacho’s resurrection of his original bill would pass both chambers this time around. What is certain is that the government, and the general public, cannot sit idly by while waiting for a $7.1-billion integrated casino resort on Saipan to be actually built as a result of the enactment of a casino law in 2014.

Actual integrated casino resort construction takes time and even if the project really gets off the ground, it’s not the magic solution to all of the CNMI’s problems including public health. Other revenue-generating bills besides anything to do with casinos—and cost-cutting measures—need to be pursued.

On the other hand, the CNMI already has many good revenue-generating laws and rules that are only waiting to be properly enforced. As an example, ensuring all stores and other business establishments issue sales receipts so that the government won’t continue to lose out on this revenue leak.

If enforcing existing laws and rules still prove too difficult for the CNMI, then perhaps it could try to borrow ideas from, say Puerto Rico, to help ensure children’s wellbeing and raise funds to fund health-related services.

Haidee V. Eugenio | Reporter
Haidee V. Eugenio has covered politics, immigration, business and a host of other news beats as a longtime journalist in the CNMI, and is a recipient of professional awards and commendations, including the U.S. Environmental Protection Agency’s environmental achievement award for her environmental reporting. She is a graduate of the University of the Philippines Diliman.

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