Gov. Lou Leon Guerrero’s insistence on continuing the 5% business privilege tax is not unreasonable. The Trump tax breaks must be fully analyzed, its long-term impacts on GovGuam revenues determined and reasonable mitigating statutes proposed before any thought of repeal is entertained. The adverse impacts of the federal earned income tax credit and child tax credits, on GovGuam’s general fund have been known since the Bordallo and Gutierrez administrations. Reasonable increases in BPT rates can provide some relief to these unfunded federal mandates. The repeal of the late Speaker Ben Pangelinan-inspired 2% BPT increase was not very well discussed or planned. Existing legislation and plans to repeal the 1% increase enacted by the 34th Guam Legislature and Gov. Calvo’s administration, without a full analysis of impacts on Guam’s economy and costs of living may be foolhardy and reckless, no matter the 2018 campaign rhetoric.
It would seem more practical and logical for the government, the Guam Chamber of Commerce which also called the “Good Old Boys” and, most especially, the newer Guam Women’s Chamber of Commerce to create a task force, chaired by the governor herself, in order that her full control over this situation will be unquestionable. This task force should be charged with the responsibility of creating a more utilitarian tax system, be it a new sales tax or simply adjustments to existing methodology, to be effective in fiscal 2021, which would guarantee “revenue neutrality” with revenue experiences in fiscal 2019 and 2020. If the levels of BPT revenues earned up to Sept. 30, 2020, must be maintained to provide for GovGuam obligations, then those obligations must be provided. But prior to proposing any sunset on existing methodology and levels, the governor should consider:
1. Creation, by executive order, of a special task force to develop a detailed study and analysis of the existing BPT system versus a new tax system adapted to existing and future conditions and needs of all sectors of the Guam community. The study should have a completion and implementation deadline which clearly establishes and sets a sunset for existing statutes.
2. This task force should be comprised of working professionals in the field of finance and accounting, mostly, housewives, as they are, theoretically, the most impacted, adept at budgeting. The governor, with her financial expertise, her experience as a lawmaker, as a business manager, as well as, her experience as a mother and housewife, should be the chairperson of this task force. Whatever happens, it will be singularly hers to own.
3. All government tax records must be available to this task force. A thorough and open accounting of the revenues realized by the BPT, past and present, must be developed – detailing earnings under the original 4% and the earnings made with the 1% increase. The task force should assume that the Trump tax breaks nor that the IRS codes, affecting EITC and child tax credits, will be repealed or adjusted favorably for Guam. It must be assumed that Guam will have to deal with these issues for the foreseeable future.
4. The government is ethically bound to provide a thorough and open accounting. Those who are granted a Guam business license should be bound by the same requirements, – inclusive of all those providing services or products to the U.S. military, or federal service, through base exchanges, commissaries, package stores, service stations, and the like. Taxes are a two-way street – and all should be held accountable. DOD’s arguments that national security considerations prevent the release of these numbers holds no water in these times.
The governor may have made many campaign statements. She should be given the time and confidence needed to fulfill those statements. At the end of the day, she will be the only one called upon to explain and answer. After holding office for the last seven months, she now owns those problems. Solutions and problems experienced during her watch, notwithstanding anything perpetrated by predecessors, will be hers, and hers only, to own.
Joaquin P. Perez is a resident of Santa Rita and a former chief of staff to then-Guam Del. Madeleine Bordallo.