The Department of the Interior defers on this issue to the Department
of Treasury, which will present a detailed report an these sectims
for the Administration.
We stress, however, that the issues raised by these sections are complex.
tory but not amther.
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 Sama, not by virtue
of Federal enactment but by virtue of territorial incorporation of
Federal law.
—
The collection of taxes has been traditionally the function of lecal
territorial goverrments. TheGovernors of Guan and the Virgin Islands
believe that the Federal acministration of taxes would intrute into
territorial prerogatives and therefore oppose mardatary 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 wilt be
Federal training ard technical assistance for territorial tax collection
Section 204
-
-
Section 204 would;extend the date‘of-inittel applicebiity of the
Federa) income tax,to, the.Northern Mariana Islands from Jamary 1, 1979,
to Jamuary 1, 1982. Federal incom tax laws became applicable to the
Northern Mariana Islands beginning Jamary 1, 1979. TheAdministration
has no objection to section 204.
The Governar.of theNorthern Mariane Islands states that: pectign 204
would result in the loss of approximtely$300,000 in reverme to the
anas'. treasury. and he prefers the provisions of section 3(d)
Northern.
of P.L. 95-348 to section 204.
tte.
i
a