Sales tax author ready for repeal

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Senator Joe S. San Agustin said his bill gives Customs and USPS authority to enter a memorandum of agreement, or MOA, to ensure enforcement.

Rollback initiative could be a stitch in time

Guam – While there may be no guarantees, it’s looking more and more like Guam’s new two percent sales tax could be deleted from the code before it goes into effect on Oct. 1st.

Sen. Joe San Agustin, who authored the new sales tax law, says he now supports Sen. Michael San Nicolas’ repeal measure to stop the law in its tracks. With other recent revenue-collection increases such as the business privilege and fuel tax hikes added to the books, San Agustin told Newstalk K57 midday radio host Andrea Pellacani he’s already noticing price increases at local stores.

“You know, I was the one who introduced that sales tax [measure],” San Agustin said. But noting recent revelations that the Department of Revenue and Taxation has failed to collect millions of dollars and has declined to act on approved hiring to strengthen its operations, San Agustin countenanced a change of heart.

Recent reports suggest that the legislature may have enough votes to repeal the sales tax and override an expected veto. “In fact…we’ve got the number of votes to repeal it…and you know I finally supported that,” San Agustin said. That number is rumored to be as high as ten strong.

Governor Calvo signed the sales tax increase into law last spring to help fund the island’s hospital and education needs, after the administration had announced it was projecting a $67 million island-wide budgetary shortfall due in part to the Trump Tax Cuts. However, recent local public hearings have revealed that not only are revenue collections lagging, the Department of Revenue and Taxation has yet to act on upwards of 40 approved hires. Hearings on the sales tax repeal are set for Tuesday, June 5th and Monday, June 11th.

The legislature will also hear testimony on the following: Sen. Regine Biscoe Lee and Sen. Fernandez’s proposals for various sales tax exemptions; Sen. San Nicolas’ specific legislation aimed at preventing the new general sales tax from applying to Internet purchases; and Sen. Frank Aguon, Jr.’s proposal to restore the recently increased liquid fuel tax to prior levels.

The growing sentiment among elected officials and intellectuals is that new taxes are pricing the least advantaged out of the marketplace and hurting businesses more than additional levies can help a government that has grown too lopsided and inefficient to tax, collect, and manage public finances effectively.