HOUSE Minority Leader Angel A. Demapan on Friday introduced a bill to exclude stimulus money provided by the American Rescue Plan Act from the list of taxable incomes under the NMI Territorial Income Tax law.
House Bill 22-81 proposes to add to the earnings tax statute a provision that says: “Stimulus payments received from the Commonwealth pursuant to the 2021 ARPA Local Stimulus Plan are not subject to the tax imposed under this section and do not constitute income for the purpose of determining the NMTIT.”
Demapan noted that payments under the 2021 ARPA local stimulus plan “would be subject to the earnings tax unless applicable law is amended to specifically exclude these payments.”
Although funded by the federal ARPA, the $500 local stimulus that thousands of CNMI taxpayers received over the last couple of months is separate from the $1,200 federal stimulus provided by the Coronavirus Aid, Relief, and Economic Security Act.
The local stimulus was distributed to CNMI taxpayers in the form of cards, which can be used to purchase items and services at local stores.
Upon receiving ARPA monies, Gov. Ralph DLG Torres established the 2021 ARPA Local Stimulus Plan providing $500 to each eligible individual and $500 to each of their dependents, “to provide assistance to households impacted by the negative economic effects of the Covid-19 pandemic.”
In an interview, Demapan said that taxing the local stimulus payment would be inconsistent with the objective of the stimulus plan.
“I believe that taxing these payments would undermine the purpose of the Stimulus Plan and would only create additional burden on our people. This legislation is important to truly help our people recover from the economic hardship brought about by the pandemic,” Demapan said.
“I want to thank Finance Secretary David DLG Atalig and his team for working with me on putting together this much needed legislation,” Demapan said.
House Minority Leader Angel A. Demapan, right, listens to Rep. Joseph Leepan T. Guerrero during a break from Friday’s House session.
