LIEUTENANT Gov. Arnold I. Palacios, in his capacity as acting governor, on Monday signed into law House Bill 22-19, which “restores” the earned income tax credit to provide relief to qualified working families and taxpayers in the CNMI.
This time, the EITC will be federally funded through the American Rescue Plan.
Authored by Rep. Tina Sablan, H.B. 22-19 is now Public Law 22-3.
In a statement, acting Governor Palacios said:
“In 2017, during 902 Consultations with President Obama’s administration, Governor Torres and members of his administration expressed the significance that the implementation of the EITC would have onto the people of the Commonwealth. For this reason, we are pleased to witness this bill’s enactment.
“I would like to thank the author of this monumental bill, Rep. Christina Sablan for her hard work in overseeing this bill’s passage. Further, I would like to take this opportunity to commend our Congressional Delegate, Congressman Gregorio ‘Kilili’ Sablan for ensuring that the Commonwealth and other U.S. territories are able to avail [themselves] of full and permanent federal funding through the American Rescue Plan.
“I also extend my appreciation to Rep. Angel A. Demapan and Secretary of Finance David DLG Atalig for the roles they played in the critical amendment of this legislation, which allows for our CNMI government to provide much-needed assistance to working families while maintaining its ability to responsibly assess its financial capacities moving forward. This legislation is evidence that when we all work together, good things can happen,” Palacios added.
In an interview on Monday, Rep. Tina Sablan said the EITC is a “proven and effective policy tool” to help lift families out of poverty and encourage work.
“For more than 20 years, the CNMI government has imposed a 100% local tax on the EITC, and recaptured refunds that otherwise would have been paid out to qualified low and moderate income taxpayers,” she said.
“For more than 20 years, our government has justified this excessive tax burden on working families by claiming the EITC was too costly for the local government to pay out, even as generous tax breaks have been given over the years to the wealthy, and corporations. That claim can no longer stand, however,” she added.
The CNMI Department of Finance earlier estimated that the EITC would cost over $20 million a year.
Rep. Tina Sablan thanked Kilili, the Democrats in the U.S. Congress and President Joe Biden for passing the American Rescue Plan Act, which will fund the EITC in the CNMI and other territories.
She said qualified taxpayers will be able to claim this credit when they file their taxes next year.
She also thanked acting Governor Palacios, Finance Secretary David DLG Atalig, and all her colleagues in the CNMI House and Senate for their support of the bill, “for recognizing the amazing opportunity made possible by [the U.S.] Congress, and for understanding the importance of the EITC in strengthening our workforce and fighting poverty.”
First implemented by the administration of Gov. Froilan C. Tenorio (1994-1998) when the local economy was still flourishing, the EITC program was discontinued by his successor, Gov. Pedro P. Tenorio, in the wake of the Asian currency crisis, which resulted in a steep drop in CNMI government revenue and an economic downturn that lasted until 2014.
Acting Gov. Arnold I. Palacios signs the earned income tax credit bill into law Monday on Capital Hill.
