HAGÅTÑA (The Guam Daily Post) — The local business community continues to struggle, according to the Guam Chamber of Commerce, which is once again seeking a rollback of the business privilege tax or BPT to help provide some much-needed relief.
“Without immediate and decisive action, Guam’s government budget is projected to reach $1.5 billion by fiscal year 2027 — an amount that risks becoming a permanent burden on future generations,” the Chamber said in a news release Tuesday.
“The current trajectory threatens economic stability and places an unfair strain on families and small businesses striving to thrive in challenging times,” the release added.
Chamber Chair Tae Oh said on Wednesday that the government raised the BPT from 4% to 5% in 2017, in response to an anticipated tax revenue shortfall due to then-President Donald Trump’s federal tax cuts.
But what was pledged to be a “temporary increase” has since become permanent, while government spending has soared, Oh said.
“Why can’t they provide some type of relief to some of the private industry? The private industry, as you know right now, is suffering,” said Oh.
The chair said they are pushing for a public hearing on Bill 11-38, introduced in January by Sen. Shawn Gumataotao, which would restore the BPT to 4%.
Gumataotao said on Wednesday that he’s waiting for a hearing to be scheduled by the Committee on Finance and Government Operations, chaired by Sen. Chris Duenas.
“A good number of the 127 bills filed with the clerk’s office have been referred to the (Committee on Finance). They are also doing budget hearings as well. (It’s) very busy for them,” Gumataotao said.
Opponents of a rollback, which includes Gov. Lou Leon Guerrero, have countered that the overwhelming majority of companies on Guam are small businesses with revenues of less than $500,000 a year, and they pay a BPT of 3%.
Oh said, while that’s “absolutely correct,” there’s another side to the story.
“There was a (Guam Economic Development Authority) report recently on all of this, and it basically said companies making less than $500,000 make up close to 90% of all businesses, … but they only contribute 6% to the (gross receipts tax),” Oh said.
“Now let that sink in…. That means 94% of the GRT is being paid by 11% of businesses,” he said.
“These are still small businesses that employ the majority of people, and these are the businesses that really need the relief right now,” Oh added.
Oh also pushed back on the notion that a tax rollback will only feed the bottom-line of the larger businesses.
“A lot of them are struggling, and a lot of them would like to give raises to their staff. A lot of them would like to improve their property or their business. They just don’t have the funds right now,” he said.
“So many businesses right now that would like to match some of the pay that GovGuam is giving, I’ll tell you that right now,” Oh added.
“Every private business is struggling trying to maintain their staff and without a strong workforce, workforce. Private businesses and small businesses, it’s really tough for them to survive,” Oh said.
The Chamber has been pushing for the rollback for the last several years, but has failed to muster enough political support to do so.
“Right now we have senators in there that know what businesses are going through, the sufferings that they’re experiencing,” Oh said. “Our current legislature is probably, they have the most potential to get this bill passed, in my opinion.”
He expects that the governor will likely oppose it again.
“Whether we get the override or not, what the business community is asking is that we hear this bill,” Oh said.
“We urge business owners, employees and all island residents to contact their senators to request an immediate public hearing on Bill 11-38,” the Chamber said.
“The decision to reduce the BPT should not be dismissed on speculation or hearsay. It demands open debate and community input,” the Chamber added.
