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Fiscal summit recommendations not included in FY 2021 budget bill passed by House

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FIVE months after the Fiscal Response Summit discussed and listed the measures that could help address the CNMI government’s financial crisis, lawmakers have yet to introduce any of them.

Among the revenue-raising proposals recommended by the summit include:

  • A 2% increase in sales tax, which will generate $5.8 million.
  • A 5% increase in luxury tax, which will generate $3.4 million.
  • A new “sin” tax (sugar, beverages, alcohol, etc.), which will generate $3.3 million.
  • A $1 increase in sales tax on tobacco products and a $2.50 increase in excise tax on cigarettes and tobacco products, which will generate $5.3 million.

These measures can bring in an additional $15.5 million in fiscal year 2021.

The summit likewise proposed cost-cutting measures such as reduction in government personnel, reduction in jobs, overtime, travel, professional services, reduction in medical referral costs, and the cancellation or postponement of the retirees’ 25% benefit, which is not required under the settlement agreement.

The Legislature was supposed to consider and/or pass these and other measures along with the FY 2021 budget.

But the House of Representatives passed House Bill 21-124 or the Budget Authority Act of 2021 without acting on any of the summit proposals.

In an interview, House Ways and Means Committee Chairman Ivan Blanco said the summit recommendations “came late so we were not able to entertain them.”

In a separate interview, the Senate Fiscal Affairs Committee chairman, Senate Vice President Jude U. Hofschneider, said tax hike measures should be introduced as standalone bills and must originate from the House.

To prevent a partial government shutdown, a new and balanced budget bill must be enacted into law by Oct. 1, 2020, the first day of fiscal year 2021.

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