CNMI's Palacios signs EITC bill into law

PALACIOS: Acting CNMI Gov. Arnold Palacios signs the earned income tax credit bill into law Monday on Capital Hill in Saipan. CNMI Office of the Governor

SAIPAN — Acting Gov. Arnold Palacios on Monday signed into law House Bill 22-19, which "restores" the earned income tax credit to provide relief to qualified working families and taxpayers in the Commonwealth of the Northern Mariana Islands. This time, the EITC will be federally funded through the American Rescue Plan.

Authored by Rep. Tina Sablan, H.B. 22-19 is now Public Law 22-3.

In a statement, acting Gov. Palacios said:

"In 2017, during 902 consultations with President Obama's administration, Gov. Torres and members of his administration expressed the significance that the implementation of the EITC would have onto the people of the commonwealth. For this reason, we are pleased to witness this bill's enactment."

In an interview on Monday, Rep. Sablan said the EITC is a "proven and effective policy tool" to help lift families out of poverty and encourage work.

"For more than 20 years, the CNMI government has imposed a 100% local tax on the EITC, and recaptured refunds that otherwise would have been paid out to qualified low and moderate income taxpayers," she said.

"For more than 20 years, our government has justified this excessive tax burden on working families by claiming the EITC was too costly for the local government to pay out, even as generous tax breaks have been given over the years to the wealthy, and corporations. That claim can no longer stand, however," she added.

The CNMI Department of Finance earlier estimated the EITC would cost over $20 million a year.

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