CAPITOL HILL Saipan — Charles V. Cepeda general manager of Pacific Trading Co. Ltd. and president of the Saipan Chamber of Commerce told the Journal that the membership of the Chamber will lobby against a bill that proposes to increase the business license fees in the Northern Mariana Islands.

“Our economy is worse today than it was 11 years ago. Eleven years ago we were in the right direction. Times are tougher now than they were 11 years ago.”

Rep. Crispin Ogo the chairman of the House Committee on Ways and Means of the (?) Saipan Legislature; said he will push for passage of legislation that would increase the annual rates by as much as nine times for some categories.

The move is not without strong opposition from the business sector whose leaders argued that the economy was better off 11 years ago when Public Law 9-22 regulating the fees was enacted on Jan. 1 1995. They said to impose the rate hikes now would exacerbate the declining state of the Northern Marianas Islands’ business environment.

House Bill 15-30 introduced by Ogo and is under review by the House Committee on Commerce and Tourism chaired by Rep. Martin B. Ada. Ogo who submitted the bill on the floor during a House session held on Jan. 18. (See chart for the proposed increase in the fees.)

Defending his bill Ogo told the Journal that businesses would still realize profits even if the proposed increase is put in place. He said that some of the fees were extremely low — such as $5 for a roadside vendor of vegetables and fish; $500 for banks; $300 for public utilities like telecommunications; and $50 for a “general business license ” which covers car dealers remittance and money transfer centers; and bars and massage parlors.

“The business community they want to make money —I understand ” Ogo told the Journal. “But looking at the current fees they can collect the additional increase in less than a month and still make profits for the remaining months of the year. If they compare the profit they’ll make after paying the [increased] fee they will still earn.”

Cepeda said the economy was too depressed for an increase. “If he looks at it as minimal we are not making as much as we were 11 years ago even five years ago for that matter.” He said he will meet with lawmakers regarding H.B. 15-30. “I’ll personally be going up the Legislature on Capitol Hill talk to the legislators and ask them to give us the opportunity to discuss our situation.” The chamber has come up with an official position not to support Ogo’s legislation noting that the proposed increase is “ in fact undisclosed taxes … as the amounts are more than what is needed to process a license.”

Ogo said he hopes his colleagues will see the merits of his bill. “I want my colleagues to understand that this is a minimal fee and it will not hurt the business community.”

A license is only part of what businesses pay. The government also requires business gross revenue tax and excise tax among others. Hotels were spared the proposed increase under Ogo’s bill because they already pay other fees including a bar tax on top of the BGRT and excise tax; hotels also pay room occupancy tax which is 10% of what they charge for a room and which is passed on to the room’s occupants. Bars and nightclubs also pay separate fees with the Department of Commerce’s Alcohol Beverage and Tobacco Control Division.

Ogo did not explain how the figures were computed for the proposed increase. He said that the idea came up during a Ways and Means meeting in January when members discussed the government’s fiscal resources. “I know the economy is not really good right now and this may not really be a good time to increase fees. But the committee realized that it’s time maybe to increase just a little bit.” He said that if enacted his measure would bring in up to $100 000 a year in revenue for the government.

In 1995 NMI hotel room occupancy was 82.62% and average room rate was $116.77. In 2004 room occupancy was 71.75 %; average room rate was $80.42. According to the Department of Commerce BGRT collections went down from $2.034 billion in 2004 to $2.020 billion last year. The government’s BGRT collections reached $2.61 billion in 1997 according to the department.

The department has likewise reported a 21% drop in garment exports amounting to $176 million and a 14% drop in tourist arrivals in 2005. According to the Department of Finance only $198.5 million will be collected in 2006 fiscal year. The NMI has a current spending budget of $213 million. The decline is attributed to several factors including the downturn in the economies in Asia in 1997. MBJ