The Senate version of House Bill 17-45 or the Pay Reduction Act of 2010 seeks to increase taxes levied on cigarettes, alcohol, tobacco and related products, beer and malt beverages.
It will also increase the current $6,000 annual license fee per poker machine to $7,500, except those located in a licensed casino.
The ATM license fee is proposed to be increased to $1,000 every year.
A 10 percent ad valorem tax on cellular phones is also proposed .
The 90 percent rebate rate that individual taxpayers get will be reduced by 10 percent.
But chamber president Douglas Brennan said the proposed tax and fee increases will have a negative impact on the overall economic activities in the CNMI.
“These tax and fee increases will have the net effect of discouraging economic activity and investment in the commonwealth. Businesses cannot absorb these increases which will be passed on directly to consumers in the form of higher retail prices,” Brennan told House Ways & Means Committee Chairman Ramon S. Basa, Covenant-Saipan, in a letter regarding H.B. 17-45.
Brennan said business establishments will just pass on their additional expenses to consumers.
“Businesses cannot absorb these increases which will be passed on directly to consumers in the form of higher retail prices. Consumers will not spend more total money as a result of these higher prices; the inflationary pressure of increased taxes and fees on some products will simply lead to a reallocation of dollars spent,” he said.
The chamber president asked the committee to include in future tax or fee hike legislation a summary of the current revenue stream, an explanation and justification for the proposed increase and projected additional revenue that would be generated from the measure.
