Two senators, one Democrat and the other Republican, have proferred two different proposals on how to use the new tax revenue that will be coming into the general fund as a result of Guam’s Earned Income Tax Credit reimbursement.
One of the provisions in the recently enacted American Rescue Plan is the reimbursement of the EITC, which on an annual basis would now bring nearly an estimated $58 million to GovGuam’s coffers.
First out of the gate was Sen. James Moylan who proposed using the EITC windfall to finally reduce the business privilege tax (BPT) by a percentage point indefinitely.
“The BPT is more than just about a tax reduction. It is a savings element for small businesses, many of whom have struggled with revenues over the past year. It is about an entity’s ability to invest into their operations, their employees, and/or into their product. It is about creating new jobs and/or opportunities. For some, it also has the potential to be about reducing the cost of goods. Saving elements from the BPT reduction is not a ‘one size fit’s all feature,’ but when it comes to economic recovery, it is a vital component,” Moylan said in a statement.
Then, Sen. Jose “Pedo” Terlaje came out with his own statement, proposing to use the EITC proceeds to fund the RISE Act instead.
“The RISE Act was originally budgeted at $30 million and with this EITC reimbursement soon we will have the additional funding available to fund RISE act payments for all, including our manamko’ retirees,” Terlaje said.
He added: “I know that my colleague Senator Jim Moylan has proposed to use this money to reduce the Business Privilege Tax for businesses that make over half a million dollars since we have already reduced the BPT for small businesses to 3%. While I support this effort, we must make good on our promise and fulfill the $800 RISE Act payment directly to our people, who will, in turn, spend this money at our local businesses.”
According to Terlaje, his proposal will end up providing economic stimulus for both people and businesses.
“Instead of top-down, economies grow from the bottom up. Use the EITC reimbursement for direct RISE Act payments to our people and it will circulate many times over in our economy. Our priority should be helping working families, our children and all our manamko’,” Terlaje said.