THE Department of Finance is not taking into consideration the estimated $6.3 million fresh revenue that could be generated from tax hikes proposed in the Fiscal Response Summit two years ago.
In his revenue forecast report to Gov. Ralph DLG Torres, Finance Secretary David DLG Atalig said an additional “sin tax” was estimated to generate $3.3 million while $1 increase in tobacco taxes is estimated to bring in $2.9 million, for a total of $6.3 million.
These “additional revenue-generating measures,” Atalig said, were among the measures proposed during the Fiscal Response Summit held in April 2020.
Atalig said these proposed tax hikes and revenue estimates are not included in the governor’s fiscal year 2023 budget submission.
“The overall effects of these revenue-generating activities are dependent upon numerous factors such as legislative action, administrative employment, and behavioral economic climate. Due to the high variability, the Department of Finance did not take into consideration these estimates for FY 2023,” Atalig said.
But in his report, he said his department “supports legislative action on updating the Hotel Occupancy Tax by adopting a Transient Accommodation Tax which would help narrow the technological gap and provide modern support for tourism in the CNMI.”
But, he said, Finance did not take into consideration the projected impact of the Public and Private Partnership or PPP program “due to lack of historical data.”
He said the program was created to maintain and rehabilitate tourism and recreational areas such as walkways, parks and gymnasiums.
“PPP is a type of program that plays a vital role with the goal of helping the CNMI move forward,” he added.
Also due to lack of historical data, Atalig said they did not take into consideration the foreseen benefits of the travel bubble program, although “this shows a promising competitive advantage that we have over other tourist destinations and should help move the CNMI into the post-Covid era.… [A]nticipated pent-up demand for tourism services should benefit the CNMI.”
Finance likewise did not take into consideration the impact of an estimated $32 million that will be refunded for taxpayers under the Earned Income Tax Credit program also due to lack of historical data.
As for the portion of the American Rescue Plan Act that will pay for the government employees’ 80-hour work period, Atalig said this must be accounted for separately from the general fund. He said due to the requirements of ARPA, Finance did not take this into account in the FY 2023 budget.
David DLG Atalig
