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High Court rules Pohnpei State Use Tax Unconstitutional

PALIKIR, Pohnpei (FSM Information Service): January 2000 - The FSM Supreme Court has struck down as unconstitutional Pohnpei State's "use tax".

In a ruling issued December 30, 1999, Supreme Court Chief Justice Andon L. wrote that the "use tax' is "a tax on imports which impermissibly interferes with interstate commerce such that the use tax provisions of the Tax Act were in violations of the FSM Constitution..."

The FSM Telecommunications Corporation had brought the case before this nation's highest court asking that the Corporation be ruled exempt from paying the tax on a motor vehicle and telephone equipment purchased outside the FSM because the Corporation was a government entity, according to the court document.

The Judge agreed to this point writing "...the Court finds that for tax purposes Telecom shall be deemed part of the national government thereby making it exempt from the tax at issue under 21 F.S.M.C. 208 and Pohnpei State Law No. 4L-35-97.

The ruling further states that Pohnpei is "Hereby enjoined from assessing further use tax under Pohnpei State Law no. 4L-35-97 and 4L-92-99 and from accepting or collecting any use taxes assessed but not due and payable under Section 14-7 of the Tax Act" as of December 30, 1999.