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Special Session extends tax clause and extends assistance nation-wide

PALIKIR, POHNPEI. July 28, 2013 – The First Special Session of the Eighteenth Congress of the Federated States of Micronesia adjourned sine-die on July 24, 2013, with the tax clause extended to September 30th and debt relief assistance extended to all four states.
As the priority item on President Manny Mori’s Call, Congress reviewed his request to extend once more the ‘sunset clause’ on the Revenue Administration Act in the FSM’s tax reform.

While Congress believed the Tax Reform effort should not proceed without the participation of all States, they were also mindful of the States’ freedom to decide and therefore expressed its concerns that the lack of legislations may hint to the intent of the two remaining states.  
During its deliberations, the Committee on Ways and Means had considered a bill proposed to extend the clause and one proposed for its repeal and opted to reject the repeal. The Committee took note of communications from the Governors of the two remaining states to the President citing positive movements in their efforts.

The State of Yap shared that they had been making “significant progress” with a “full set of tax reform efforts transmitted to the legislative branch.”  The letter from the State of Pohnpei mirrored the progress by Yap State and noted that their recent Long Term Fiscal Framework exercise highlight the need for a tax reform. Pohnpei further noted that the Legislature has taken the lead in meeting with the various stakeholders and members of the communities.

After arduous discussions and much activity on the floor, Congress passed Congressional Act (CA) 18-06, to extend the tax reform Sunset Clause until the end of the fiscal year, September 30, 2013, to allow time for the two remaining states to successfully address their role in the nationwide tax reform effort.

With the sunset clause addressed, Congress shifted its attention to the fiscal state of the nation and decided to extend massive assistance to all four states.

Congress passed a measure to absolve the State of Kosrae from repayment of a loan provided by the National Government. In 2006, a recovery loan of $1,500,000 was given to the state to help alleviate its financial crisis for which an outstanding balance of $1,310,000 remains. Due to the current financial position of the State of Kosrae, Congressional Act (CA) 18-07, is to forgive the state from repayment.

In the same vein, Congress passed a measure to absolve the State of Chuuk from repayment of a loan provided by the National Government in 1997.  The National Government provided a recovery loan of $3,761,987 to the state to help alleviate its financial crisis for which an outstanding balance of $748,804 remains. Due to the current financial position of the State of Chuuk, CA 18-08, is to forgive the state from repayment.

Congress passed CA 18-09, as a measure to amend a previous appropriation law by changing the use and allottees of funds previously appropriated. The measure also provided $100,000 each to the at-large representatives of the States of Chuuk and Kosrae.

Another measure passed during the first special session is CA 18-10, to amend a previous law to change the allottee of certain funds previously to the Governor of the State of Chuuk or his designee.

And finally, Congress passed CA 18-11, a measure to appropriate $1,680,000 for the States of Pohnpei and Yap to assist in retiring debts and for budget shortfalls with a clause specifying that the funding should not be used for personnel or travel. Accordingly, the State of Pohnpei is to receive $1,130,000 with $130,000 to the Micronesian Legal Services Corporation and $895,000 towards the principal amount owed by Pohnpei employers to the Social Security program. The State of Yap is to receive the remaining $550,000 provided that $50,000 be for fuel of a Field Trip ship.
With the exception of the CA 18-06 which is now Public Law 18-06, all other Acts are undergoing review and consideration for the President’s signature. 

In addition to the Congressional Acts, Congress adopted three resolutions during the First Special Session of the 18th Congress and they are:

Congressional Resolution (CR) 18-31, is a measure to set the ceiling of funds available during the current fiscal year at $60,266,034 for which $52,566,824 is to be from domestic revenues and the remaining $7,699,210 to be from the amended Compact funding.

CR 18-33, is the measure to confirm Vincent Tafileluw as the State of Yap’s representative on the FSM Social Security Board.
The final measure of the First Special Session of the 18th Congress is the approval and acceptance of a United Nation’s funding of $10,000 to be applied towards implementation of two conventions under the UN:

  • the Convention on Elimination of Discrimination Against Women; and
  • the Convention on the Rights of the Child

With the passage and adoption of all the noted measures, the First Special Session of the 18th Congress of the Federated States of Micronesia adjourned sine-die on Wednesday - July 24, 2013.

In accordance with its Rules of Procedures, the next Regular Session of the Congress is scheduled for September 12th. 

 

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Information about the Congress of the Federated States of Micronesia is available through the:

CONGRESS PUBLIC INFORMATION OFFICE
P.O. Box PS-3  ?  Palikir, Pohnpei 96941 ?  T:  (691) 320-2324 ? F:  (691) 320-5122
e-mail: congresspio@mail.fm ?    website: www.fsmcongress.fm

 

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