t i The Department of the Interior defers on this issue to the of Treasury, which will present a detailed report a for the Administration. We stress, however, that the issues raised by these sections are complex. — Customs laws, which may be Federal or local, may be applicable in ome terr- tory but not arcther. Also, the application of United States income tax _ laws differs from territory to territory. For example, the mirror theory of taxation applies in the Virgin Islands, but not in the other territories; United States income tax laws apply in Samoa, not by virtue of Federal enactment but by virtue of territorial incorporation o:£ Federal law. The collection of taxes has been traditionally the fumction of local territorial goverrments. The Governors of Guam and the Virgin Islands believe that the Federal administration of taxes would intmae into territorial prerogatives and therefore oppose mandatory Federal collection of territorial taxes. =We agree that the proposal now contained in H.R. 3756 raises a significant question as to whether it reverses the long-standing United States Goverrment policy of fostering greater local self-goverrment for the territories. The Interagency Task Force reviewing territorial policy is addressing various issues, including tax administration, considered in these sections. Presidential decisions will be forthcoming later this year. Among the options to be considered by the Administration will be Federal training and technical assistance for territorial tax collection agencies e ™~ Section 204 Section 204 would.extend the date of initial applicability of the Federal income tax to the Northern Mariana Islands from January 1, 1979, to January 1, 1982. Federal income tax laws became applicable to the Northern Mariana Islands beginning January 1, 1979. TheAdministration has no objection to section 204. The Governor of the Northern Mariana Islands states that section 204 would result in the loss of approxirately $300,000 in revemme to the Northern Marianas' treasury and he prefers the provisions of section 3(d) of P.L. 95-348 to section 204. ,