Chamber executive director Kyle L. Calabrese, in his letter to the Legislature, said once a balanced budget was enacted, “we…stand ready to work with the commonwealth government collaboratively on this issue.”
Calabrese, who rarely missed a session during the lengthy deliberations on the budget bill, reminded lawmakers that increasing taxes is not the only way to address the government’s financial woes.
He said they understand and share the Legislature’s concern for the well-being of government employees, “but it is the same concern businesses have for their own employees.”
He said raising retail prices, which is what tax and fee increase would bring about, is not the answer to revenue decreases.
Calabrese said high retail prices bring sales down. This offsets any revenue increases brought about by an increase in taxes and fees, he added.
Therefore, he said, the CNMI government’s overall general fund tax revenues will decrease as a result of the additional taxes and fees.
He urged lawmakers to meet with private sector managers, including bank officials, to discuss the sales and economic implications of a fee and tax hike so that the Legislature can make “informed decisions.”
The chamber of commerce, he said, has offered to make available to lawmakers individuals who have expertise in areas relevant to the tax and fee increase proposals in the Legislature.
According to Calabrese, they have not said “absolutely no tax or fee increases.”
The chamber has only asked that any proposed increases in fees and taxes be studied carefully in order to minimize the negative impact, he added.
Calabrese said “it is irresponsible to just try something right away and see if it will work. The appropriate way to do it would be to receive data and testimony from the government agencies involved like the Department of Finance, its Division of Revenue and Taxation and the Department of Commerce.”
He said lawmakers should work with the staffers of these agencies to understand the data, then, work with tax experts to understand the tax implications.
The Legislature, Calabrese added, has some potential solutions but these will take some time to implement.
He said imposing higher taxes will put law-abiding businesses at a disadvantage compared to the others who violate the law.
The government’s lack of enforcement efforts for many years has harmed law-abiding businesses and led to a decrease in government revenues, he added.
Considering that the big chunk of the budget goes to government personnel, he said, the chamber wants to know “how many employees have been reassigned from non-revenue generating positions to revenue- generating enforcement.”
