Guam – A performance audit released by the Office of Public Accountability [OPA] Thursday concludes that the benefits of GEDA’S Qualifying Certificate [QC] program are un-known because the positive or negative impact of the tax abatements granted by the QC program are “unverifiable and incomplete.”
The QC program offers tax breaks to qualifying businesses. It is administered by the GEDA and it has been in effect for nearly 50 years. The program is aimed at stimulating investment in and creating jobs on Guam.
Yet, in this first ever OPA audit of the program, despite the program’s nearly half-century of existence, the auditors could not determine whether THE program has generated any of its intended benefits because Doesn’t have sufficient data to determine and they have not put any performance metrics in place to measure the success or failure of the program.
The audit is especially critical of what they called the “generous tax benefits” granted to the the island’s insurance industry. In one case, the auditors found that GEDA itself had calculated that GovGuam would suffer an economic loss of $95.2 million dollars over a 20 year period as a result of a QC, which GEDA granted to one un-named island insurance company. [The OPA has a policy of never revealing the names of private businesses who are the subject of it audits].
The performance audit was conducted at the request of Senator B.J. Cruz who says he is not opposed to the goals of the program, but he is opposed to the in-flexible way that GEDA applies the QC law.
In the case of domestic insurance companies, the Senator is critical of GEDA’s habit of granting 100% tax abatements. He maintains that GEDA has the flexibility to grant smaller abatements and he believes they can set a limit on the amount of tax abatement granted to a business and to terminate the QC when the investment benefit has been reached. Automatic renewals do not have to be granted.
GEDA Business Development Manager Tina Garcia took disagreed with Cruz’s interpretation of the law saying that 100% tax abatement to domestic insurance provides must be provided.
At a new conference Thursday afternoon, GEDA Administrator Henry Taitano said they may disagree with some of the technical recommendation made by the OPA, but they do agree with the OPA on the need for better metrics to measure the programs benefits and they have already begun working on that.
However Taitano also emphasized the importance of keeping the program because it is a valuable marketing tool for GovGuam.