Pay on time to get paid on time
BUSINESSES should pay the business gross revenue tax on time. Of course. There are legal penalties if they don’t. In the CNMI, however, their major vendor is usually the Commonwealth government, which is notorious for not paying on time, especially during an economic downturn.
The governor himself has pointed out that the CNMI government “has close to $30 million in outstanding debt to vendors….” How do you think the affected businesses are meeting their obligations — including to the government — if they’re not getting paid for the services and products they provide? How are they coping? And for how long?
And then there’s the (federal) government-created worker shortage, compounded by a senseless “touchback” provision. A lack of workers will result in downsizing or business closures. Which will mean less revenue for the government, which prioritizes its payroll and other obligations to voters. On Capital Hill, paying vendors, particularly the not-so well-connected, is an afterthought.
Everything in the economy is interconnected. Peter doesn’t pay Paul, who can’t pay John, who can’t pay Mary. Ask CUC.
Businesses, in any case, should pay the BGRT on time. But to make sure they do, the government should also pay its vendors on time.
Don’t hold your breath.
Legislate with caution, always
THE government, alas, is a relentless imposer of burdens on the private sector in the name of the “common good” as defined by politicians currying favors with voters.
To “combat crime against businesses,” the Digital Closed Circuit Television Camera Act of 2023 has ben introduced in the CNMI House of Representatives. As usual, the intent is admirable. But as the chamber of commerce president has noted, the cost of compliance may be a problem for the already struggling small- and medium size businesses. The bill “would require all businesses in the CNMI to install colored CCTV cameras on their premises specifically in all access points, all exit points and all check-out counter points to continuously record 24 hours a day and seven days a week. It would also require that all recordings be safely and securely retained for 60 days.”
That doesn’t sound cheap.
The bill mentions a subsidy program, but the government does not have the funding to support it. Ask its vendors. Or CUC.
And who do you think will end up paying for yet another regulatory burden imposed on businesses?
There should be a way to address the bill’s concerns and those of the affected businesses. The bill’s author should be commended for reaching out and seeking comments before recommending its passage.
A more important ‘pivot’
THE “pivot” away from China, the CNMI’s second largest tourism market, should not be a problem for the Commonwealth government if it would also, for once, pivot away from overspending.
As pointed out before, the government has a spending — not a revenue — problem. Without the China tourism market, the government is obligated to make budget cuts, and it must stick with them until a new major source of revenue comes in.
As for the FY 2024 budget proposal, the senators are right. Why does it include a non-existent $9.1 million as “additional revenue”? That amount is supposed to be “raised” by a tax-hike measure, which, as far as we know, hasn’t been introduced yet.
The administration and the Legislature should also take into consideration the (worsening) worker shortage and its likely impact on local businesses — and the government’s revenue collection.
The CNMI government cannot continue to operate based on imaginary revenue projections.
