He attended the House session on Tuesday but did not have the chance to speak to the members because the session focused on the controversial Saipan casino bill.
In his letter to Ways and Means Committee Chairman Ramon S. Basa, Covenant-Saipan, Calabrese said H.B. 17-50 is a tax increase proposal.
Introduced by Speaker Froilan C. Tenorio, Covenant-Saipan, the bill will reduce the tax rebate this year and eliminate it next year.
This is one of the revenue generating measures that the House leadership hopes will cushion the impact of the cash-strapped government’s very limited budget for fiscal year 2011, Tenorio said.
But Calabrese said any reduction and elimination of tax rebate will be ruinous to individuals, families, businesses and the CNMI government.
A tax increase will harm the CNMI economy, he added.
Calabrese said once H.B. 17-50 becomes law, all income tax and withholding tax rates will double by Jan. 1, 2011.
It will make Guam more attractive to investors from a tax standpoint “as Guam uses U.S. tax treaties to determine withholding tax rates and foreign investor’s profit repatriation,” he added.
“The CNMI’s current rate is approximately 17.5 percent on repatriation, but this will go to approximately 30 percent under this bill,” he said.
The bill will discourage new investment, Calabrese added, and further impair the CNMI’s ability to attract and retain professionals.
“Many companies doing business in the CNMI and Guam have structured their businesses to push revenues to the CNMI to take advantage of the tax rates [here].As this bill will take away our tax advantage, it will decrease tax revenues,” he said.
According to Calabrese, “This bill will further delay any economic recovery…and basically shut down investment in the CNMI.”
