Senator answers criticisms about online shopping tax

Senator Joe S. San Agustin (PNC file photo)

Senator Joe S. San Agustin has responded to criticisms against his Bill 166-35, which seeks to include for taxation imported items arriving into Guam via the US Postal Service.

Some residents interviewed by PNC News have criticized the bill, saying that the bill would increase the costs for consumers who are shopping online because the prices online are more affordable.

In a statement sent to PNC News, San Agustin said online shopping will still be cheaper in many ways. “The use tax is just 4 percent, that’s only 40 cents for $10 worth of goods, or $4 on $100. It is lower than the business privilege tax, which is 5 percent. In addition, this bill may also allow local businesses to be more competitive.”

There have also been criticisms about how the bill will be enforced since currently, the Guam Customs and Quarantine Agency doesn’t have purview over domestic mail carried by the U.S. Postal Service.

But San Agustin said his bill precisely gives Customs and USPS authority to enter into a memorandum of agreement, or MOA, to ensure enforcement.

“A similar measure has been successfully implemented in the CNMI. We can use their experience to get this off the ground for Guam. You already have a customs form on each package that comes to Guam, with an estimated value of its contents. Parcels deemed taxable would be marked and the customer notified to pick up at the existing Customs and Declarations window at the post office. There the tax would be assessed and collected, then the parcel released. The mechanism for enforcement already exists, it just needs to be implemented and enforced,” the senator said.

He added that if Bill 166-35 passes, Customs will have increased revenue, and therefore more resources.

With regard to the sales tax, San Agustin said his bill is similar but not the same since use taxes are levied on imported personal property not subject to a sales tax.

“If Guam had a sales tax, you would only pay one tax – either at the point of sale or at the port of entry. This bill applies the existing use tax to goods coming in via USPS, as it already applies to FedEx, UPS and air/ship cargo,” the senator said.