By Mar-Vic Cagurangan
Variety News Staff

THE government of Guam badly needs to plug the revenue leaks that cause the depletion of public coffers, Public Auditor Doris Flores Brooks said yesterday.
As early as February 2003, the Office of the Public Auditor has made a bunch of recommendations which Brooks said could have reduced GovGuam’s deficit and enhanced its revenue sources.
“What’s happening here is that the cost containment has not been working. We need to shore up our revenue base,” Brooks said in an interview with Variety.
“Everybody is banking on the Marines’ arrival. I say let’s forget about the Marines. Let’s shore up our own revenue base so that when the Marines come, it would be the gravy,” she added.
As GovGuam’s deficit continues to grow, only a few of OPA’s 2003 recommendations have been implemented, Brooks said. OPA reported yesterday that GovGuam’s deficit represents 70 percent of annual revenues, and that Guam scored the lowest in the Office of Insular Affairs’ financial performance evaluation of four insular territories.  (See related story)
The 2003 OPA report recommended the elimination of the retirees’ cost of living allowance and replacing it with supplemental benefits only for those retirees whose annuities are $30,000 a year or less, the lifting of tax exemptions granted to various industries, increasing fees for various services, and the abolition of Tendan Gobetno, among other things.
Brooks said in the last three budget acts, the Legislature implemented OPA’s recommendation to provide the supplement only to those retirees whose basic annuity is $20,000 or less.
However, Brooks recalled that during the election period, senators scrambled to give COLA even to those who were receiving $90,000 year.
“Given our financial condition, it is difficult for the government to pay the COLA, but we recognize that the people at the lower end are the ones who need it most,” Brooks told Variety.
Brooks is also pressing for the elimination of the Dave Santos Act gross receipt tax exemptions, which at the time of the audit was estimated to bring between $8 and $10 million into the government treasury.
The Dave Santos Act, in its original form, provided tax breaks to business owners who were making less than $50,000 a year.
“When the Dave Santos Act was conceptualized, it was originally intended to grant exemptions only to small retailers such as fishermen and farmers who sell their produce on weekends,” Brooks said.
Over the years, however, the GRT exemptions have been expanded to include virtually all businesses whose gross earnings are $500,000 or less. The program now gives GRT exemption to bars, lawyers, accountants and insurance agencies.
Subsequently, GovGuam is losing a major revenue base, Brooks said. “We need to take a closer look at the David Santos Act. We have too many tax exemptions,” she said.
“Our next audit is focused on these tax exemptions, to see what industries are getting tax credits and how much we are losing. There’s too much leakage through these tax exemptions,” Brooks added.
In an earlier interview, Revenue and Taxation director Art Ilagan said GovGuam is losing $30 million a year to tax breaks.
“I’ve always been opposed to tax breaks. If every industry would pay the 4 percent GRT, we wouldn’t have this deficit,” Brooks said.
Another suggestion is to raise the fees for marriage licenses, driver’s licenses and health certificates, which Brooks said have not been modified in over 20 years.
“The cost of paper work and processing of license has increased. If we raise the driver’s license fee from $5 to $20 and multiply that by 40,000, we will get $800,000,” Brooks said, adding that raising other service fees could generate close to $3 million in additional revenues for the government.
Brooks also said abolishing Tendan Gobteno, the government store that sells supplies, could generate potential savings of over $216,000 in salaries and over $ 1 million by not carrying this inventory.
According to the OPA 2003 audit, the government store had an inventory of $1.5 million and a receivable from the agencies of $1.8 million as of Sept. 30, 2001.
The government has no business being in a business, Brooks said. “The government store competes with private businesses. As a result, we are taking away business from businesses,” she added.