AS you may have noticed, while the economy remains in a coma, the CNMI government has been passing laws that impose new or higher fees on businesses, specifically on those with not enough political clout or connections.
You don’t have to be a financial expert to figure out that the CNMI government doesn’t have enough money to pay for all the promises that politicians have to make in order to get elected.
You also don’t have to be an economist to realize that the CNMI government is not collecting enough revenue because like many other governments around the world it shut down the tourism industry, a.k.a., the local economy.
And so many elected officials say they have to raise revenue. Unfortunately like many of us, they believe that raising revenue means getting it from other people, i.e., non-voters or those who comprise a small voting bloc.
Like many of us, moreover, elected officials are either unaware or don’t care about the possible consequences of raising the costs of doing business amid an economic downturn.
Unlike politicians, businesses have to comply with basic arithmetic. To pay for the additional cost imposed by the government, they can either raise their prices — which many of them do not want to do because they are aware that higher prices may lead to lower demand — or cut costs elsewhere: personnel expenses, usually, which may involve laying off workers.
And what do businesses get in return for the higher taxes and/or fees demanded from them by the government? Let’s be honest. In the CNMI’s case, we get more government: more government employees and/or higher pay for (some of) them; more new government office expenses; and more political promises to provide more “free” or “inexpensive” things to voters, the costs of which, as usual, will exceed the revenue the government can collect on a small tropical island where businesses face so many restrictions and so many costs and so many challenges (that include economically illiterate politicians and government officials). For all their trouble, businesses are usually labeled “greedy” for not giving more of their money to politicians who want to give it away to voters.
To paraphrase Kevin D. Williamson, nobody on Capital Hill understands what it takes to run a successful business venture (that doesn’t depend on political connections), but they do know how to get in the way, how to hold up one hand and say “No!” while holding out the other hand and saying “Pay!”
But then again
WHAT can elected officials reasonably do that will not cost them their elective positions? And so they have to “do something” like imposing higher or new fees on businesses (i.e., “the rich”).
But will it raise the revenue the government hopes to collect? Who knows. The government hopes so. Will it result in unintended consequences that can create more and bigger problems? Who knows. The government hopes not.
But there will be no additional local government revenue until the economy improves, and it won’t until the tourism industry fully recovers, and that, in turn, depends on so many factors and events, almost all of which are beyond the CNMI’s control.
All over the world, in any case, many governments — national, state, city, municipal, territorial — are in deep financial quagmire because those who run them have overpromised, and those who elect them are fond of overpromises.
Happily, unlike many other island jurisdictions in the Pacific, the CNMI is part of a much bigger nation, the U.S. which has 50 states and other territories. And CNMI voters can also vote with their feet.