BankPacific: Fee hike bill unjustified

In a letter to House Ways and Means Committee Chairman Ray N. Yumul, R-Saipan, BankPacific Saipan branch manager Phil Flores said H.B. 16-217 will raise the fees on retail and commercial banks by 500 percent — from $500 to $3,000 a year.

Flores said lawmakers should consider “a more reasonable increase of from $500 to $1,000.”

This increase, he added, “would be more affordable to the banking community and would impose less of a burden to the community when it is passed on.”

Fees have remained constant in the past few years, “but the banks just had an increase of about 67 percent on gross receipt taxes pursuant to Public Law 16-2,” Flores said.

“We are still trying to make adjustments to this new legislation which directly impacted our operating cost. We empathize with the government’s budgetary needs; however, to untimely impose additional overhead cost…is something to be reconsidered….”

Flores at the same time noted that the bill does not include finance companies or credit unions.

“They should also contribute their equitable shares. Further, finance companies, uninsured credit unions and non-FDIC insured banks require more attention…as they have no existing regulatory oversight or control as do FDIC-insured banks,” Flores said.

He said to collect more revenue, the government should increase its efforts in the collection of taxes, particularly in recovering lost taxes from businesses closing without paying due taxes.

“There are millions of dollars uncollected,” he added.

The government, he said, should implement a mechanism to prevent renewal of business licenses of entities that are delinquent in their tax payments, or fail to execute a payment plan.

“Allowing businesses to continue to operate and not pay their taxes is not only unfair but a disservice to those businesses and private citizens that do pay their taxes. We must realize that more tax revenue can be generated from 10 businesses consistently paying their taxes than having 20 or more businesses operating and some not paying their taxes,” Flores said.

He urged the government to “closely regulate and tax security brokers who transfer large amounts of both consumer and government dollars outside the CNMI for investment.”

The revival of the Economic Strategic Council should likewise be considered, Flores said.

The council can “develop a workable economic plan to address the revenue shortfall and…develop a long-term economic plan and implementation strategy that complements the goals and objectives envisioned by CNMI leaders. BankPacific would be pleased to participate in the work of the council should it be revived,” Flores added.

Besides BankPacific, Bank of Guam, Bank of Hawaii, Bank of Saipan, City Trust Bank and First Hawaiian Bank are the other banks that operate in the CNMI.

The Saipan Chamber of Commerce, in an earlier letter, urged lawmakers to reject H.B. 16-217, which was introduced by House Minority Leader Oscar M. Babauta, Covenant-Saipan, Reps. David M. Apatang, R-Saipan, and Justo S. Quitugua, D-Saipan.

The chamber said the measure is “another attempt to increase taxes…in the guise of fees.”

“These increases will discourage new investment…and will harm current businesses at a time when most companies are facing decreased revenues and increased costs.” The proposed increases, the chamber added, are “staggering and unsupported.”

Asked if Gov. Benigno R. Fitial, who ran on a pro-business platform, supports the bill, Press Secretary Charles P. Reyes Jr. said: “We haven’t discussed [it]. I will ask at [today’s] cabinet meeting.”