Cut government spending instead
ABOUT two weeks ago, the Senate Fiscal Affairs Committee conducted a public hearing on the tax-hike measures that were passed (i.e., rubber-stamped) by the House, and expressed concerns about their rationale. As the Senate floor leader noted, raising taxes on commodities or services will likely result in higher prices, lower demand, fewer sales and, consequently, less tax revenue — the exact opposite of what the tax-hike measures are supposed to achieve. In the case of the imported betel nut and lime tax hike, she also pointed out that from the current collection of over $13,000, the supposed revenue to be collected if the tax hike becomes law is $1.2 million! The bill’s proponents are assuming that consumers would take it on the chin, happily pay more, and not seek cheaper alternatives. That is not realistic. That, in fact, is delusional thinking.
The betel nut and lime tax, according to some of its proponents, would also encourage more consumption of local betel nut, which runs contrary to the bill’s supposed public health goals. But then again, this particular tax measure is an incoherent bill by design. It aims to please as many influential sectors as possible (public health advocates among them), but its true goal as stated by the author herself is to “prevent layoffs” in the Commonwealth government, the main employer of CNMI voters. How exactly? By inflating the tax hike measure’s revenue projections, and citing them in the next budget law to justify the government’s (over) spending levels, which it clearly cannot afford. As stated before, most, if not all, of these tax-hike measures are basically budgeting gimmicks.
We commend the Senate Fiscal Affairs Committee for conducting public hearings on these ill-advised House bills, and reminding everyone that basic arithmetic also applies to legislation, however well-intentioned.
Price control by any other name
THE CNMI government is spending more than it can collect, but here comes another proposal to create…another government entity. Saying that the prices of commodities on her island is too high, the Rota House member said she would introduce legislation to create a price council under the governor’s office.
Do people really need a new government office to help consumers “navigate the marketplace with confidence”? Isn’t that what window-shopping is for? She said a price council would lead to a “more transparent and equitable pricing system.” Transparent how? Equitable to whom? Or does she mean price controls, which, based on recorded human history, have never worked even if enforced by bloodthirsty totalitarian regimes. Shortages, black markets, reduced quality, and other economic distortions and inefficiencies are among the well-documented results of price controls.
If Rota’s House member wants to help her constituents cope with high prices then she should consider proposing tax breaks for retailers and/or direct subsidies. How to fund them? Good question.
Questions for the House special panel
LAST year, the House Committee on Judiciary and Governmental Operation announced that the previous BOOST legislative hearings had “resulted in the discovery of unprecedented levels of corruption and fiscal mismanagement relating to federal funds,” and that “several criminal investigations” had been initiated.
So what is the status of the investigations?
One of the members of the House special panel that has resumed the BOOST probe said they want to take back inappropriately awarded BOOST funds. They said they already have “pieces of evidence” — invoices, receipts, copies of WhatsApp messages and other related documents —that indicate that public funds were misspent.
So why not cut to the chase and ask the AG’s office to file the appropriate legal action?
