By Mar-Vic Cagurangan
Variety News Staff

THE Guam Hotel and Restaurant Association said the proposed fee increases that would be absorbed by business entities catering to tourists could kill Guam’s visitor industry.
Department of Revenue and Taxation director Art Ilagan, however, said tourism is an industry that has been enjoying tax breaks.
“Hotels are exempted from real property tax and the gross receipts tax, plus they get a 75 percent rebate on their income. The taxes that they pay are absorbed by their customers. The hotels are not the ones paying,” Ilagan said.
GHRA president Mary Torres urged the association members to testify at the Legislature and oppose the new fee schedule packages that have been incorporated into Bill 74, the 2007 revised budget measure.
“Recognizing the financial challenges the government of Guam currently faces, GHRA strongly opposes any increases in taxes without cost cutting measures in place, commitment on government reform, and accountability and justifications for the fees and taxes being introduced and amended through Bill 74,” Torres stated in a memo to GHRA members.
Torres, who testified at the Legislature on Tuesday, expressed her concerns about the way Bill 74 has been introduced and amended without a public hearing.
The proposed fees and tax increases will apply to business licenses, service licenses, liquor licenses, and recreational and amusement permits, among others.
“With the proposed fees and tax increases, the community also has to deal with the increases in federal wages, low visitor arrivals and having to remain competitive with other destinations in an already competitive market,” Torres said.
She added that before considering the option of further taxing the people, the government of Guam should concentrate on reorganization, efficiency and cost-cutting measures to right size its operations.
Torres said additional fees and taxes would affect not only hotel and restaurant owners but also consumers, who will bear the additional costs.
The GHRA president complained about the double taxation imposed on the hotel industry.
Besides the business license, hotel and motel owners pay for an additional $25 permit to operate the establishments, on top of the 11 percent occupancy tax.
Torres said not all hotels are given tax breaks as claimed by Ilagan. “Only the ones with qualifying certificates are exempted from GRT. And it’s only a small number,” Torre said.
On Tuesday, John Limtiaco, who runs a trucking and limousine service, questioned the proposed $1,000 liquor fee for limousines.
“Why do we have the same rate of license fee as the bars? We are not selling liquor inside the limousine like bars do. We are selling experience to the tourists who use our limousine service,” Limtiaco told senators during Tuesday’s budget session.
Ilagan, meanwhile, defended the administration’s proposed fee increases, saying they were long overdue.
“We tried to implement these new fees in 1995. The driver’s license fee was raised from $5 to $25. But a couple of months after they were implemented, the Legislature decided to roll them back,” Ilagan said.