FINANCE Secretary David DLG Atalig said his department is in favor of the goal of House Bill 22-81 which proposes to exempt from the CNMI tax the “local stimulus” provided by the federal government through the American Rescue Plan Act.
House Ways and Means Chairman Donald Manglona sought comment from the Finance secretary and Attorney General Edward Manibusan regarding the measure introduced by House Minority Leader Angel Demapan.
In his comment, Atalig said the Department of Finance “is in favor of the policy goal of this legislation to ensure recipients are not obligated to pay taxes on stimulus payments.” However, he said, there are also legal questions involved so Finance will defer to the comments provided by the attorney general.
Problematic
In his own comment, AG Manibusan described as “problematic” the language of the bill that states that ARPA-funded stimulus “does not constitute income for the purposes of determining the NMTIT [or Northern Marianas Territorial Income Tax.]”
The AG said the Legislature does not have the authority to modify NMTIT.
He said the Legislature “cannot redefine what constitutes gross income under the NMTIT or create an exclusion from gross income because such an act would violate the Covenant and run foul with binding legal precedent.”
Manibusan recommended removing from the bill language that refers to NMTIT. He proposed the following language: “Stimulus payments received from the Commonwealth pursuant to 2021 ARPA Local Stimulus Plan are not subject to the tax imposed under this section.” But the AG crossed out the part of the provision that says, “and do not constitute income for the purpose of determining NMTIT.”
According to the AG, the secretary of Finance, as governor’s delegate, is charged with administering and enforcing the NMTIT which includes determining whether the stimulus payments are subject to an exclusion under the NMTIT.
