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Monday, March 17, 2003

Bill to repeal gross receipts tax hike

By Marissa A. Eusebio
Variety News Staff

HAGÅTÑA — Since the increase of the gross receipts tax, senators have been working together to repeal the measure, saying it would inevitably subject residents to more financial hardships. In addition, senators have expressed concern that the tax would make Guam “very unattractive” in comparison to its neighbors.

Efforts put forth by senators include the scrapping of the GRT, a petition drive and Bill 44. Sens. Jesse Lujan, R-Tamuning, and Ray Tenorio, R-Yigo, support the repeal of the law increasing the GRT.

In addition they are sponsors of legislation creating a voter introduction program that aims to increase the participation of the people of Guam in the process of making laws. It would also give the governor the ability to borrow up to $125 million through a bond issue as part of an economic stimulus plan.

Bill 44 would repeal the 50 percent increase of Guam’s gross receipts tax, which went from 4 to 6 percent as enacted in Public Law 27-5.

Sen. Bob Klitzkie, R-Yigo, who submitted the bill, has gained the support of all six Republican senators. He is hopeful that the community and business leaders will also support his legislation.

He said the tax increase will lead to more jobs losses, more individual hardship, more businesses closing, less economic growth and fewer opportunities for businesses to come to Guam.

“This is the wrong tax at the wrong time that will have exactly the wrong result for our people,” said Klitzkie.

He provided several reasons for opposing the GRT increase. First, he believes that the tax is too heavy a burden on low-income taxpayers since it will increase the prices of goods and services. Second, the tax is regressive and is too heavy a burden on small businesses that cannot afford to pay it which would result in more job losses in the private sector. Third, businesses under fixed-price contracts signed before March 1, 2003, could be forced to reduce services by eliminating jobs. Fourth, there is no evidence that raising the GRT from 4 percent to 6 percent will increase revenues to the government. And finally, raising taxes should come after first reducing government expenses and the workforce, as well as initiating reforms, reorganization and privatization.

 


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