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[Sharing of Tax Revenues between State and
National Governments]
[58.2% of the voters in the August 27, 2002, referendum voted
in favor of this amendment. A 75% affirmative vote was required to pass
the amendment, so the amendment failed.]
9. Committee Proposal No. 01-15:
This proposed amendment will amend Section 5 of Article IX to
increase the states’ share of the tax revenues from 50% to 80% and decrease
the share of the national government from 50% to 20%.
ANALYSIS:
The FSM voters rejected a very similar proposed amendment in a
popular referendum several years ago. After the rejection of the proposal, the
FSM Congress enacted a law giving the states 70% of the revenues and retaining
30% for the national government.
Approval of this proposal will not mean direct disbursement of
tax revenues to local communities for public projects. The revenues will,
instead, be allotted to state legislatures for appropriation for whatever the
members decide. If the revenues remain with the national government, the FSM
Congress will use it for whatever the members fancy.
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One aspect of looking at this proposal is from the "trust
factor" angle. If the voters trust their representatives in the FSM
Congress as the most reliable and responsive to their communities’ needs
then they should vote against this proposal. On the other hand, if their
representatives in their respective state legislature have always come through
for their communities then, by all means, vote for it. The voters can actually
quantify the number of projects and amount of money spent by their
representatives in the Congress and state legislatures in their communities. A
comparison of the number of projects and how much money their representatives
in Congress and state legislatures bring to their communities can help them to
decide how they will vote on this proposal.
The other aspect is the needs of the national government
versus the needs of the state governments. The national government needs to
fund its own operation within and without the country as well as providing
adequate funding for the College of Micronesia-FSM system and the Fisheries
Maritime Institute in Yap. In addition, the national government pays
membership fees and contributions to several international organizations. On
the other hand, the state governments need to fund their own operation, the
primary and secondary schools, and operate and maintain the field trip ships
for the outer islands. In this respect, perhaps it should be pointed out that
the state governments will derive some benefits from Committee Proposal No.
01-11 which set aside 20% of the fishing permit fees for primary and secondary
education. In other words, combining this proposal with Proposal No. 01-11
would give the state governments an advantage of about 30% increase in
revenues over the national government. I am not at all sure that the national
government can absorb this 30% decrease in revenues.
© John R. Haglelgam, March 4, 2002
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