Governor Calvo has called the legislature into special session today to consider a solution that would stabilize the government and prevent furloughs, a reduction in hours, or paydays without paychecks.
“We have to take immediate action to address the impact of the reduction in taxes on the operations our government provides to the people of Guam, including public health, safety and education,” Governor Calvo said.
Legislation sent to the 34th Guam Legislature earlier today would temporarily raise the BPT rate from 4% to 6% for the next two years: .25% for Department of Education critical capital improvements, .75% for the hospital, and 1% to maintain government operations. The rate will automatically be lowered down to 4.75% after two years. Of this, the additional .75% above the regular 4% rate will be allocated exclusively to GMH as a dedicated funding source.
The Tax Cuts and Jobs Act of 2017 reduces taxes for businesses and individuals. However, there is an immediate impact of reduced revenue for the local government. This temporary increase would bridge that gap and equalize the benefits to tax payers with the financial stability for the government.
Additionally, the transmittal letter accompanying the draft bill includes information from the January 5, 2018 Opinion Memorandum of the Office of the Attorney General of Guam to the 34th Guam Legislature. It states:
- The duty of establishing taxes and fees are essential to the operation of government, they are beyond the authority of the Legislature to delegate.
- As a matter of statutory construction when faced with seemingly inconsistent laws the latter in time prevails.
- One Legislature cannot bind future Legislatures.
It’s important to note that members of the business community have supported the concept of a 2% increase.
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