IN the Youth Congress, a bill, Y.C.B. 19-3, has been introduced to increase excise and ad valorem taxes on soft drinks, food and agricultural commodities. The goal is to raise funds for Youth Community Gardens. Youth Congress bills are “proposed proposals.” If passed by the youth senators, their bills are forwarded to the governor and the presiding officers of the Legislature “for disposition.” A bill can then be introduced in the Legislature based on the Youth Congress measure — or not.
We should be glad, in any case, that Y.C.B. 19-3 has been introduced so we can remind ourselves why such measures, however well-intentioned, should be rejected.
As has been repeatedly pointed out before, consumers will end up paying for tax hikes. The targeted items will cost more. The sales of those items are likely to decline. The affected stores and businesses will end up with less revenue. The government’s tax revenue will decrease. The tax hike will have the opposite effect of what its proponents assume.
And even if — for the sake of argument — the tax-hike generates additional revenue, the cash-strapped CNMI government is likely to spend the money on its other and more pressing obligations. Like government payroll.
Here’s a better idea. (Youth senators should try to find out if there are others.)
Transform the Youth Congress into an activity hosted by schools, like a CNMI-wide Student Council. No additional public funding needed. Use the Youth Congress’ current budget of $42,559 to fund agriculture vouchers for students who want to grow gardens in their backyards. Enterprising youth leaders should and can figure it all out. The learning is in the doing.
There is no need, in short, to create another “reason” for another government entity or program that must then hire government employees to oversee another government activity that will require funding that the government doesn’t have.
oOo
Meanwhile, in Japan, The Wall Street Journal has reported that Numazu, a coastal city near Mt. Fuji, is offering free welding lessons to collect more tax revenue.
“Doesn’t sound fun? How about a Porsche test drive, some live koi or a large bundle of toilet paper? Still not interested? What about serving as mayor for a day?”
According to the Journal, “Japan has a system that enables taxpayers to redirect some of their local taxes to towns or cities where they don’t live — and receive a gift or other token of gratitude in exchange.”
The goal was to help rural places that were losing population. The unintended consequence was “a cutthroat battle between municipalities dangling gifts to attract enough taxes to maintain public services.”
A Numazu government official told the Journal: “It’s just the truth that people choose where to donate based on the thank-you gifts. So with that, we thought, how do we differentiate ourselves from the other cities and towns? How do we win?”
“In the financial year ended March 2023,” the Journal said, “donations under the system approached a trillion yen, or almost $7 billion…. Many in Japan now equate the program to online shopping.”
A financial planner in Yokohama told the Journal that she “uses the program to stock her larder with essentials such as meat, fish and vegetables, and with luxury items that she wouldn’t otherwise buy, including scallops, fish eggs and crab. ‘I don’t usually choose to donate to somewhere because of a connection to the place,’ she said. “It’s more because I look at the thank-you gift and think, ‘I really want to eat this thing.’ Her children, she said, enjoy pointing out where each product came from on a map near their bathtub. ‘Even if it’s a vegetable they usually hate, they’ll eat it,’ she said.”
A tax program that actually makes children eat veggies!
One mayor, however, believes that the system is “a mistake.” His jurisdiction posted a loss of $70 million in tax revenue due to deductions from the hometown tax system. If losses continue to grow, he told the Journal, his jurisdiction could struggle to fund day-to-day services such as road repair and garbage collection. Last winter, the jurisdiction introduced “gift cards for hotels and restaurants, high-end sweets and jewelry. Donations doubled.”
In Takikawa, a town with a declining population on the northern island of Hokkaido, the municipal government “is offering the chance to be mayor for a day for a donation of a million yen, or about $7,000. A donor would get to sit in the mayor’s chair and stamp a pretend decision, speak with residents about the town’s problems and eat its celebrated mutton stew — cooked by the real mayor…. The town also offers donors the chance to fly in a glider.”
In Numazu, “10 people so far have taken up the offer of a half-hour welding lesson at a local ironworks in return for a tax payment of around $70. Numazu is planning to offer scuba diving and golf packages as well. Misawa, the local official, said 96-roll packages of toilet paper—produced at a local factory — have been one of the most popular items offered.”
For taxpayers, it’s more fun in Japan.
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