Gov. Lou Leon Guerrero Monday declared that she would like to see the 5% business privilege tax remain in place “forever,” or at least until “we start collecting more” taxes or “we have other new sources of revenue.”
The governor has urged lawmakers not to roll back the BPT to 4% as proposed in a bill introduced by Sen. James Moylan.
Following a proclamation signing at her office in Adelup yesterday, the governor was asked whether she would like to extend the current 5% BPT rate beyond the 2020 spending year into 2021.
The governor answered: “I would like for it to stay, and I would like for it to stay forever."
The tax, commonly referred to as gross receipts tax, affects most items Guam consumers need including food and other household goods, medical costs and other necessities.
When asked again if she meant 5% "forever," the governor said, “That’s what I would like, yes.”
She said the 5% BPT has enabled the government of Guam to close the $68 million revenue shortfall created by the Trump tax cuts.
“I have spoken to many business leaders,” said the governor, “and they are OK with the 5%.”
A supplemental statement from the governor's office issued Monday afternoon pointed out that the Trump tax cuts will impact Guam's revenues through 2025.
"I am open to any responsible proposal that will secure the revenues we need to keep Guam stable," Leon Guerrero stated in the release. "Until then, my personal preference is to keep Guam moving forward as our administration has been doing because moving backward would be irresponsible and reckless."
The goal is to come up with a budget “that will certainly provide the public services that the people deserve,” said the governor.
The governor’s fiscal team, led by Bureau of Budget and Management Resources Director Lester Carlson, has been at odds over the fiscal year 2020 budget with the Legislature’s Office of Finance and Budget, which is being led by Director Stephen Guerrero.
During last week’s hearing on the Legislature’s proposed budget, Carlson said Bill 186-35 “in its current form, does not adequately fund” the governor’s priorities which he said are health care, public safety and education.
The governor on Monday called the differences normal. She said there are always going to be issues in any budgeting process. “It’s just going through the discussion phase,” she said.
Finance committee Chairman Sen. Joe San Agustin and the OFB staff met with Carlson and his BBMR team on Friday, Leon Guerrero said, adding “there is a lot of progress being made.”
OFB is taking a more conservative approach on projected revenues for the upcoming fiscal year compared to the governor’s proposal. The governor said she is confident that the revenue projections in Adelup’s proposed budget will be there to support spending listed in Bill 75-35, which she submitted in April.
“I’m very confident,” said the governor about the projections, adding that her confidence “lies in the fact that we are collecting, and we are collecting above what we had projected.”
The governor said Department of Administration Director Edward Birn and Department of Revenue and Taxation Director Dafne Shimizu were confident as well.
“I told them to hire as many people as they need to bring in the collection,” she said. “There is still a lot of leakages that need to be plugged up.”