Governor should be open to tax relief as way to ease economic struggles

GHOST TOWN: Sidewalks that used to be filled with tourists remain empty as seen Dec. 29, 2021, in Tumon. David Castro/The Guam Daily Post

Heading into a third year of the COVID-19 pandemic, the struggle of businesses and families to make ends meet continues.

Not only do we have added expenses brought on by public health mandates and our own preferences to stay safe, but unavoidable slowdowns in a rebound for a tourism industry also mean for many out there, we still are making less money than we used to – less money than we needed to survive and thrive back in 2019.

This means families still can’t patronize as many local businesses as they have in the past. It means employers still can’t afford to bring their entire workforce back to full employment.

Nearly three years into this struggle, we can predict the ripple effects of this economic stress by now. Workers get laid off as businesses close for good. People turn to drugs and crime. Children stop showing up to school. Those already struggling to hold their heads above water get robbed, or worse.

As part of plans to restore the island’s economy, Gov. Lou Leon Guerrero and her administration have offered a number of programs, most federally funded, that offered financial aid to residents and the private sector, from direct grants to rent and utility relief.

More long-range strategies, such as job training to begin new careers and attracting new industries not reliant on tourism, have been a welcome sight, offering some hope that Guam can rebuild to be more economically resilient against a global health crisis.

But more needs to be done.

The governor herself acknowledged this in a recent joint letter she wrote to President Joe Biden, along with seven other governors, asking the White House to approve more foreign worker visas.

“We recognize there are many causes of the labor shortage, including some that are outside our control. However, that fact only highlights the importance of the policy solutions we can control,” the governors wrote.

Leon Guerrero has used her executive authority to spend billions of dollars in congressional bailouts as she sees fit – and it’s certainly worked to insulate the local treasury from any pandemic depression. To her credit, she’s also directed money to small businesses, to the expansion of affordable or free child care, and to help attract visitors back to Guam.

“We want to be clear that we make this request even as we do all within our power to create an economic environment conducive to economic growth. We are investing in programs to reskill our workforce for the jobs currently in demand, we’re considering various changes to our tax codes that might make work more attractive, we’re supporting impacted businesses, and we’re doing everything else possible to reduce barriers to workforce participation,” the governors stated in the letter.

Considering her tough stance on reducing the local business privilege tax, seeing Leon Guerrero be open to changes in our tax rates seemed to signal a change in policy.

It was disappointing, however, to learn that despite Leon Guerrero signing her name to that shared sentiment, no tax relief would be coming – at least not from Adelup.

Krystal Paco-San Agustin, the governor’s director of communications, confirmed for The Guam Daily Post that the joint letter doesn’t necessarily reflect Leon Guerrero’s positions.

“It was a collective letter. This issue is not specific to Guam,” Paco-San Agustin said in response to questions on what changes to Guam’s tax codes the governor was considering.

The final guidance from the U.S. Department of Treasury for spending American Rescue Plan state funding, a huge bailout at the governor’s disposal, allows for tax cuts or reform so long as it doesn’t “directly or indirectly offset a reduction in net tax revenue resulting from a change in law, regulation or administrative interpretation.”

That means the government of Guam won’t be risking federal repayment so long as a tax cut doesn’t result in the treasury losing money at the end of the year. Considering how the governor has managed congressional pandemic aid so far, and collections last fiscal year surpassing revenue seen before the pandemic began, there must be a way to afford tax relief.

We ask the governor to look into the best mechanism for this, be it a tax credit applied across the board, a temporary reduction for certain taxes, or conditional rebates that incentivize local commerce. Since legislation is ultimately required, we also urge senators to work together to propose a responsible relief program that can withstand a potential veto from the governor.

Until all of us bounce back from a prolonged, crippling COVID-19 cash crunch, easing government financial obligations is worth exploring and enacting.

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