Guam – Senators have been in session on a bill to create a 2 percent sales tax for several days now. On Monday they were in session until 9 p.m. There’s been a lot of discussion and a lot of amendments added to the bill.
So where does the bill stand right now? Will they vote soon? Will it pass? Although it appears that they’ve made some headway with the measure it also appears that things are still up in the air.
Majority leader Senator Tom Ada says it looked like senators were getting close to not only voting on the proposed 2 percent sales tax but even passing it.
“When we recessed last night, we had made considerable headway and had we voted last night I think the bill would have passed. Then of course this morning one of the colleagues introduced an amendment which changes the bill substantially,” said Senator Ada.
He was referring to Senator Mike San Nicolas’ amendment that would exempt Guam residents from the sales tax and instead increase the proposed sales tax from the 2 percent in the original version of the bill to 6 percent for non-residents only.
“I think those are significant changes and the members have asked to have more time to discuss this because I believe that these are substantive changes that could be a game changer,” he added.
In fact, one of the changes means less revenues than the original bill would’ve brought in. Rev&Tax Director John Camacho has said a 2% across the board sales tax would’ve generated roughly $130 million dollars annually. If residents are excluded from the sales tax completely and only non-residents are taxed it’s estimated that only $25 million would be generated.
“If the amendment fails the bill would be back to what it was last night and the last head count that was taken it appeared that there might be the 8 votes to pass the bill at least as we had it yesterday,” said Senator Ada.
The amendment did fail. Nevertheless, minority leader Senator Jim Espaldon says the original bill has already been altered significantly.
“Over the past several days a lot of amendments have been thrown into the original bill and I’m curious to see what that looks like. Because I expressed it last night at the session that sometimes we’re throwing in amendments so fast that we don’t really have time to understand its effect on the bill overall or its effect on existing law or even its effect in terms of unintended consequences that we haven’t even thought of because everything is moving so fast,” said Senator Espaldon. “In the end, bottom line I think we all realize something needs to be done. Not only a tax increase or the creation of a whole new tax, but I believe that in working together with the executive branch, the executive branch has really got to embrace the idea that there is real concern down here at the legislature that not enough is being done to really trim costs right now immediately or if they are trimming costs they might be trimming in the wrong places. I mean if we’re talking the fire department and police department that might be the wrong place to be the initial cut. I think there are a lot of other services that probably can be looked at to be scaled down aside from public safety. One of the things we don’t wanna do is not do anything.”
Senators adopted an amendment by Senator Tommy Morrison that would implement the 2% sales tax on October 1st and instead raise the business privilege tax by 1% from April 1st until September 30th. The idea is to allow Rev&Tax to adopt rules and regulations for the implementation of the sales tax.