For Immediate Release
April 13, 2018
Hagåtña — The Administration will implement a tax amnesty program, as it continues unwinding many of the contingency measures meant to preserve cash that were enacted prior to the passage of Public Law 34-87. The tax amnesty program is intended to collect past due taxes for tax years 2016 and prior. This has been a topic pressed by several senators and many members of the public in recent weeks.
Prior to the passage of Public Law 34-87 and the delays that preceded it, the uncertainty of the immediate affects that the federal tax cuts would have on GovGuam made it necessary to put drastic cost-cutting measures in place. At the time, it did not appear that the Legislature was prepared to pass a bill to meet this fiscal crisis, but since the bill was passed, the fiscal environment has stabilized to a large degree. We now have a roadmap for fiscal stability, which includes for the first time a dedicated funding source for the Guam Memorial Hospital and the Department of Education.
“With the government taking a $30M General Fund cut to the current year’s budget, H2B applications getting approved, and implementing a tax amnesty program, there is no longer a need for a furlough,” Governor Calvo said. “I don’t want our government employees and their families to worry about their jobs, as this uncertainty has negative implications on their well-being as well as the economy.”
The Administration will continue to hold the line on spending, requiring agency heads to live within their means, with the continued plan of reducing the cost of government by $30M or more.
Recruitments, personnel actions, and travel will be approved on a case-by-case basis, and depend heavily on agencies’ new reduced budgets, the funding source, and the nature of the work.
“The Governor and I would like to thank the thousands of Government of Guam employees and Speaker BJ Cruz, Sens. Joe San Agustin, Tom Ada, Wil Castro, Jim Espaldon, Tommy Morrison, Louise Muna, and Fernando Esteves, who worked with the Administration to help stabilize our government and our economy in the last few months,” Lt. Governor Ray Tenorio said.
Governor Calvo warns, however, that proposed legislation that seeks to amend the sales tax as stated in Public Law 34-87 could place the government’s financial stability back in peril.
“Let’s not undo the work we’ve already done. If we want to cut costs, let’s work together to look at ways to create a more efficient government that does not endanger the level ground we have created,” the Governor added.
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FREQUENTLY ASKED QUESTOINS
Q. When will the tax amnesty program start?
A. The DRT will work on the details to include the day of implementation as well as the day the amnesty program ends. An announcement is forthcoming.
Q. How long will the tax amnesty program last and how will it work?
A. The program will be TEMPORARY. Those who owe taxes 2016 and prior will be given a narrow window to make payment in full. Details of the program will be worked out with the DRT in the upcoming weeks.
Q. Why are you doing a tax amnesty program?
A. During legislative hearings and session, the public and several senators felt that this was necessary. We agree.
Q. For those who have paid past due taxes, as well as penalties, is it fair to begin a tax amnesty program?
A. The program will be temporary, brief, and is an effective tool that has been used in the past by the government to collect receivables. Senators and members of the public have pointed out that in challenging fiscal times it is far better to collect “something” rather than “nothing.”
Q. Why is the government not reducing expenditures?
A. The government IS reducing expenditures. The Executive, Judicial, and Legislative Branches are all cutting a minimum of $30M in this year’s budget.
Q. Why would the government allow for actions like recruitments?
A. The executive branch alone is reducing its budget by roughly $25M, which requires cost cutting for the balance of this fiscal year and into the next fiscal year. There are certain recruitments and hiring that will actually save the government funding in areas like overtime (i.e. Fire Department). There are other recruitments that are needed to generate revenue and have a return on expenditure. In addition to this, there are federally funded and special fund positions that were not impacted by the fiscal crisis, which squarely affects General Fund revenue, and have a federally funded mission to fulfill as a condition of their funding. As long as agency heads live within the reduced budget ceiling they have been given, we will count on them as well as BBMR to determine the priorities.
Q. Is the Administration being fiscally responsible?
A. Yes. The Calvo Tenorio Administration has demonstrated fiscal responsibility since entering office. Tax refunds have been paid out in months as opposed to years, household income has risen, unemployment has dropped over 60% and while the U.S. federal government’s deficit continues to grow dramatically, the Administration has managed to cut the Government of Guam’s deficit by 68%.
