THE Saipan Chamber of Commerce said it supports House Bill 23-7, which would “properly” tax tobacco products. But the chamber also wants clarification on the bill’s definition of “little cigars” and “filter cigars.”
Authored by Rep. John Paul Sablan, H.B. 23-7, which was passed by the House of Representatives on May 10, 2023, is now with the Senate Fiscal Affairs Committee.
The bill aims to “increase government revenue,” by redefining “cigarette” to ensure that all tobacco products are “properly taxed” in the CNMI.
According to the bill, certain tobacco products “escape” taxation because they are classified as “little cigars” or “filtered cigars” when “in fact, the tobacco products are more like cigarettes.” Based on the CNMI’s excise tax law, taxable tobacco products are defined as cigarettes.
In a letter to Senate Floor Leader Corina L. Magofna on Friday, Chamber President Joe C. Guerrero expressed his support for the tax measure on behalf of the chamber.
He said they applaud the intent of H.B. 23-7 “to generate much-needed revenue for our local government, particularly in the aftermath of the post-pandemic era.”
“While we support the intent of the bill, we kindly request clarification regarding the definition of cigars, specifically distinguishing between ‘little cigars’ and ‘filter cigars.’ The current definitions appear to be contradictory, and it is crucial to have clear and unambiguous distinctions between these two categories. This clarification will contribute to the effective implementation and enforcement of the proposed taxation measures,” Guerrero said.
He added that H.B. 23-7 “represents a step towards fairness and responsibility in the taxation of tobacco products in the CNMI. By establishing accurate classifications, the bill promotes market fairness, regulatory compliance, and the well-being of our community.”
In a report, the House Ways and Means Committee stated that H.B. 23-7 would “apply a tax imposed on ‘roll your own’ tobacco products purchased by consumers to make themselves. The potential collections for a scenario of a pack containing .45 [ounce] in each pack sold at a price of $8 per package, would amount to approximately $4.80.”
If a total of 1,000 packages were sold within the CNMI a year, this would increase excise tax collections for these tobacco products by $4,800, the committee report added.
