Congress against

income tax in US Trust Territory

The introduction of income tax has been postponed in the US Trust Territory of Micro nesia although members of the House of Representatives and the Senate spent a good part of

their January sittings discussing

proposals.

The income tax bill was based on a 1968 study by Dr. Richard Pollock of the University of Hawaii, but most Micronesian congressmen were against the tax measures proposed.

“Kill it,” said Senator Tosiwo Nakayama of Truk, getting pretty near the general opinion about direct taxation. He was in favour of rais ing import duties to get additional revenue.

Tax on Kwajalein

One of the more appealing aspects of the bill was the possibility of taxing people on Kwajalein, site of the US anti-missile base. Most con gressmen were probably in favour of that, although government members of the Congress of Micronesia were doubtful whether it could be done as the site is run by the US Depart ment of Defence. If individuals could be taxed it was estimated that, with 5i20,000 from businesses operating there, Kwajalein would provide $1.4 million per annum towards TT revenue. Without Kwajalein, revenue from income tax would be about sBoo,ooo—-$332,000 of it from US personnel in TT Government employ ment, $140,000 from businesses and the rest from private residents.

It was calculated that six US officers and 15 Micronesians would be needed to staff a taxation office and that it would cost about $250,000 initially to set up the TT income tax programme.

General opinion seemed to be that direct taxation would have a small effect on the economy as it was not proposed to tax income from agri culture. fishing or copra (the three main industries); and that, as it stood, the bill would likely deter overseas investors as there was no provision for depreciation of capital assets.