By Gemma Q. Casas
Variety News Staff

THE Senate passed a measure reducing by 1 percent the user’s fees paid by Saipan garment manufacturers who are already exempted from paying the business gross revenue tax.
The Senate passed House Bill 15-207 with amendments on March 8, and it will head back to the House of Representatives.
H.B. 15-207 was authored by Speaker Oscar M. Babauta, Covenant-Saipan.
H.B. 15-207, as amended by the Senate, seeks to reduce the user fees from 3.7 percent to 2.7 percent of the gross value of the merchandise manufactured in the CNMI for export to the U.S.
Department of Finance statistics show that the cash-strapped CNMI government collected $19.499 million in garment user’s fees in fiscal year 2006.
This year, the amount is projected to go down to $11.5 million.
If H.B. 15-207 is enacted into law, the user fee collections will further go down by at least $115,000.
The new 2.7 percent user fees are to be in effect until U.S. Congress amends the U.S. Headnote 3(A) of the Harmonized Tariff Schedule to allow Saipan factories to use more imported materials in their “Made in USA” apparel.
According to the bill, the garment industry needs the government’s support in order to compete with factories in developing countries that have lower labor and production costs.
Since Jan. 2005, more than a dozen small and major garment factories on Saipan have shut down operations and moved to other developing countries.
“In order for the commonwealth to stay this exodus (of factories), incentives must be granted to foster and economic environment that will facilitate the viability of the garment industry,” H.B. 15-207 stated.
“It is the intent of this Act to reduce the user fee tax so that the commonwealth garment industry will remain viable and contribute to the commonwealth’s economic revitalization,” it added.