Senate Vice President Donald Manglona, the chair of the Senate Fiscal Affairs Committee, speaks during a public hearing conducted in the Tinian library on Friday. From left, Sen. Celina R. Babauta, Senate Floor Leader Corina L. Magofna, Manglona, Sens. Dennis Mendiola and Karl King-Nabors.
MAYOR Edwin P. Aldan and other municipal officials do not oppose tax hike proposals as long as they will also benefit Tinian.
In a public hearing conducted by the Senate Fiscal Affairs Committee on Friday at the Tinian Public Library, Senate Vice President Donald Manglona, the committee chairman, gave Tinian officials and members of the community an opportunity to comment on five tax-hire measures:
They are House Bill 23-7, which would increase the tobacco tax to $5 from $3.75; H.B. 23-41, which would impose a $5 excise tax on imported betel nut; H.B. 23-68, which would impose a 10% ad valorem tax on private individuals buying vehicles outside the CNMI; H.B. 23-78, which would increase to 15 cents from 5 cents the tax on soft drinks and alcoholic beverage containers; and H.B. 23-74, which would impose a 3% tax on construction activities that cost over $250,000.
With Manglona were the committee’s vice chairwoman, Senate Floor Leader Corina L. Magofna, and members, Sens. Celina Babauta, Dennis Mendiola and Karl King-Nabors.
Tinian Municipal Council Vice Chairwoman Anna Marie San Nicolas testified on behalf of the mayor, who could not make it to the public hearing. The other municipal officials who commented on the tax measures were Tinian Finance Resident Director Melissa Mendiola and Commerce Resident Director Susan Perez.
Testifying as a member of the community was former Board of Education member Lucy Blanco-Maratita.
Taken into account
In his testimony read by San Nicolas, the Tinian mayor said he must ensure “that the best interests of our community are taken into account when making this decision regarding taxation and budget allocation.”
The mayor said he understands that the proposed tax increases are intended to raise revenue for the CNMI general fund to address the shortfall in the fiscal year 2024 budget and possibly the FY 2025 budget, too.
But Aldan noted the lack of provisions requiring the Legislature to appropriate the funds generated from tax increases to the CNMI general fund account, “which is precisely where the funding shortfall lies.”
He said given the need for more financial support to fund basic operating units, such as utilities, all the three main islands are in dire need.
He recalled that during the initial deliberation on the FY 2024 budget between the House and the administration, “they clearly stated that an increase in taxes will assist in [addressing the] shortfall in revenue in the CNMI general fund.”
“However, with the bills before us today for public comment, they lack a provision assuring that these revenues will supplement the shortfall. Furthermore, language must be included in the proposed bills allowing the three municipalities to acquire some revenues to augment the lack of funding for operations and utilities within our municipalities,” the mayor said.
It is also “disconcerting,” Aldan said, that the bills’ authors have not provided a “precise estimation or projection of the total revenue the CNMI will receive from the proposed tax hikes.”
He said thorough research and revenue projection must be conducted to ensure that the tax increases are “aligned with the CNMI’s current circumstances and revenue shortfall.”
He urged the committee “to carefully consider these points as you deliberate on the proposed tax bills. Our community relies on the prudent allocations of funds, and any tax changes must be thoroughly vetted with the well-being of our citizens in mind.”
Enforcement
For her part, Perez expressed her concern about H.B. 23-7 which she said “only addresses the increase in tax but not enforcement. She said Commerce’s Alcohol, Beverage and Tobacco Control focuses on prohibiting the sales of alcohol and tobacco to minors by retail establishments, restaurants and bars.
So she wants to know, how much of the funds to be generated by H.B. 23-7 will be earmarked to ABTC for the enforcement of the existing law.
Currently, Commerce Resident Director Susan Perez said Tinian Commerce has only two Alcoholic Beverage & Tobacco Control or ABTC employees and was not allocated funds in the FY 2024 budget for its operation.
Without adequate resources to operate, how can ABTC enforce the law prohibiting the sales of alcohol or tobacco to minors? she asked.
She said the tax hike measures should include allocations for the municipalities’ needs. “What good will the bill do to my department if the law is passed and no funding…is given to Tinian Commerce to effectively enforce existing laws?” she asked.
Mandated task
Finance Resident Director Melissa Mendiola said her primary responsibility is to ensure that her department enforces its mandated task, which is to properly collect taxes.
She wants to know if, once the tax-hike measures are enacted into law, “will there be a portion of funds allocated specifically for…the [resident] Department of Finance?”
If provided funding support, she said Tinian Finance can ensure “the continued delivery of services to the people and the businesses in our community.”
Extra steps
Former Board of Education member Lucy Blanco-Maratita said she supports the tax-hike measures except for H.B. 23-68, which would impose a 10% ad valorem tax on private individuals buying vehicles outside the CNMI; and H.B. 23-74, which would impose a 3% tax on construction activities that cost over $250,000.
Regarding H.B. 23-68, she said, “I think it could go the extra steps.”
“Why not exempt used cars?” she asked. “So if you get used cars, you are not buying new…. You are basically recycling and by doing so, you reduce the overall carbon footprint used to make that new car. So I am not in support of that.”
Blanco-Maratita said she also opposes H.B. 23-74 because the construction of commercial apartments is not exempted from the proposed tax.
“If we are not exempting apartments, that increase in tax would essentially increase apartment rent for tenants,” she said.
