Senators to vote on tax raise Thursday; San Augustin believes it will pass

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Guam – Senators concluded discussions on the 1% BPT increase and 2% sales tax bill and originally recessed until Friday at 2 p.m. to vote on the measure. However, on Thursday morning the Speaker announced that they would return from recess on Thursday afternoon at 4:30pm to vote.

The bill’s author Senator Joe San Augustin says right now there are enough votes to pass the measure. The bill has been changed significantly via various amendments that have been added on the session floor. So today we took a look at what’s in the bill that lawmakers will be voting on come Friday.

“Do you think your bill has the votes to pass it on Friday?” asked PNC.

“Yes sir I honestly believe I have enough votes. I hope that it stays there. I think that we have if not 8—9 votes,” said Senator San Augustin.

The measure started out as a simple 2% sales tax across the board but after adding 12 amendments the bill will need to be engrossed which means each amendment will need to be added into the bill so that it reads as one consistent piece of legislation rather than a piece meal of amendments. Because there are so many amendments some of which are complicated Speaker B.J. Cruz originally announced that it would take until Friday at 2 p.m. to engross. However the legislature was able to finish engrossing the bill sooner allowing them to vote on the legislation at 4:30pm on Thursday.

So, what’s in the bill? A major amendment was one introduced by Senator Tommy Morrison to start out first with a 1% business privilege tax increase that would begin on April 1st and last until Sept. 30. Then on October 1st a 2% sales tax would kick in.

“Well number one the BPT increase could happen as soon as identified in the amendment one April 1% that brings in $30 million. As soon as the sales tax comes in it’ll offset that and because it’ll start a new fiscal year it’ll bring in about $60 plus million,” said Senator San Augustin.

Originally the bill would’ve generated an estimated $120-130 million a year. However, an amendment was added excluding some things from this sales tax.

“You have to remember that the bill originally started out with everybody getting a sales tax so what was excluded because Senator San Nicolas brought it in the bankings and the insurance folks are excluded,” said Senator San Augustin.

This changed the estimated amount of revenue that would be generated to about $60 million a year. This is less than the estimated $100 million shortfall expected for next fiscal year. Senator San Augustin says this will force the government to reduce spending. In fact, another major change to the bill was Senator Frank Aguon Jr.’s amendment that makes it easier for the governor to cut costs by reorganizing the government. Then there is Senator Mike San Nicolas’ amendment that requires the enactment of a fiscal realignment plan to cut $30 million in spending before the tax raises take effect. Senator Tom Ada amended the bill requiring the governor to submit a cost cutting plan before the tax raises take effect. Senator Frank Aguon Jr. opposed this saying it doesn’t guarantee that anyone will make $30 million in cuts.

“So, in my opinion let’s not try to pull a fast one over our people and I say in my opinion,” said Senator Aguon.

“Point of personal privilege Senator, Mr. chairman nobody is trying to pull a fast one,” said Senator Ada.

“All of a sudden the BPT tax is going to increase from 4 percent to 5 percent with no real commitment of budgetary reduction cost reduction for this government,” said Senator Aguon.

Nevertheless, Senator San Augustin feels his bill is a good compromise that raises revenues but not to the level the administration wanted which he says will force GovGuam to make cuts.

“Nobody is gonna get their cake and eat it or they gotta shave off the icing,” said Senator San Augustin.