Wednesday, August 21, 2013

President Mori signs Congressional Act No. 18-11, item vetoes $895,000

FSMIS (August 21, 2013): President Manny Mori informed Congress that he has item vetoed an amount of $895,000 proposed in Congressional Act No. 18-11 for “principal amount owed by Pohnpei employers” to the Federated States of Micronesia (FSM) Social Security.

Congressional Act No. 18-11 would appropriate the sum of $1,680,000 from the general fund of the FSM for the fiscal year ending September 30, 2013, to assist Pohnpei State and Yap State “in retiring debt and covering budget shortfall, and for other purposes”.

Under this proposed legislation, Pohnpei State is to receive $1,130,000 inclusive of $130,000 to be directed to the Micronesian Legal Services Corporation and the $895,000 owed to FSM Social Security by some employers.

The State of Yap is to receive an amount of $550,000 that includes $50,000 to “be used for fuel for the Field Trip Ship”.

The funds appropriated are to be allotted, managed and administered by the Governors of the respective States according to the Financial Management Act of 1979, and other relevant laws and regulations.
Although President Mori indicated his agreement with the general intent of the Act, he stressed some concerns in the “language and purpose” for the portion allocated for Pohnpei State.

The President pointed out that the laws governing social security “impose an excise tax”, which all employers must remit to the social security administration.

“Failure to pay tax is a violation of law…this act appears to reward non-payment of tax by ‘Pohnpei employers’ without penalty and without any review of the problem leading up to the non-payment of tax”, the President stressed in his August 15 message to Congress regarding the Act.

He also said that the Act “sets a dangerous precedent” where delinquent employers are not only let off from making owed payments but the National Government is also compelled to make the payments on their behalf. 

Having stressed his views, President Mori signed the Act on August 15, designating it FSM Public Law No. 18-11 and returned it to Congress for further review.

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