Radio New Zealand - Te Reo Irirangi o Aotearoa

Northern Marianas garment factories sue US government

Posted at 20:37 on 30 July, 2010 UTC

Eleven former garment factories in Northern Marianas are suing the United States government to recover taxes they claim they paid by mistake between 2004 and 2007.

Saipan’s 34 garment factories began shutting down about five years ago when the World Trade Organisation lifted trade quotas, with the remaining three closing their doors early last year.

The industry contributed some 60 million US dollars in direct taxes a year to the local government.

Our CNMI correspondent, Mark Rabago, says the 11 factories claim they were wrongly assessed for social security and medicare taxes.

“CNMI being a US territory, were not supposed to be assessed for social security and medicare taxes because the ones who are employed, the majority from these garment factories, are foreign national workers. So they were not supposed to be taxed social security and medicare taxes and with that contributions of employers should also not be taken by the federal government.”

Mark Rabago says it’s not known how much money the factories want returned.