FROM THE PUBLISHER ’ S DESK
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Revenue leaks : $ 111 million and more
All tax revenue , according to the American humorist P . J . O ’ Rourke , is the result of holding a gun to the taxpayer ’ s head . “ Not paying taxes is against the law . If you don ’ t pay your taxes , you ’ ll be fined . If you don ’ t pay the fine , you ’ ll be jailed . If you try to escape from jail , you ’ ll be shot .”
So pay tax , we do . In many cases , we do overpay . Thus we raise our eyebrows when Adelup boasts about itself each time it releases our tax refunds — our own money .
On top of the income tax that we pay every year , we also pay all sorts of taxes — some of them written in fine print or passed on by businesses to consumers — just so we can live our lives . To wit , liquid fuel tax , water and electricity tax , tobacco and alcohol tax , property tax , vehicle registration fee , credit card surcharge , trash collection fee , business privilege tax for business owners and use tax for importers , among others .
When the business privilege tax rolls back from 5 percent to 4 percent at the end of September , the 2 percent sales tax kicks in on Oct . 1 . And there ’ s no provision for the sales tax to either roll back or ever go away .
While already being subjected to tax dystopia , we wonder why the government of Guam is always scrounging for money . It ’ s always looking for areas in which to levy a new tax , if not attempting to borrow more on the bond market . As of 2018 , GovGuam is buried in a $ 2.3 billion debt , entailing an annual debt service of $ 80 million , which accounts for more than 10 percent of the government ’ s $ 688 million budget .
The Guam Supreme Court recently shut down Gov . Eddie B . Calvo ’ s pleas for the judiciary to force the Legislature to pass a bill that would allow the governor to borrow $ 75 million a year — for three years . But you see , while the three branches of government cannot hold a gun to each other ’ s head , the government , collectively , can poke the gun at us when it wants to pull a highway robbery .
We are aware that the perennial public deficit is the result of lack of equilibrium in the government ’ s fiscal playground . GovGuam overspends and underperforms . While the ordinary mortals are overtaxed , those in the privileged sector are undertaxed . And based on the Office of Public Auditor ’ s reports , generous tax exemptions are exacerbated by the Department of Revenue and Taxation ’ s dismal tax enforcement and collection .
Three of OPA ’ s most recent audit reports alone estimated a combined total of $ 111 million in tax leakage and foregone revenue a year . These estimates were based only on records that were actually available . Those accounted for are left with question marks .
In its December 2017 report , OPA noted that GovGuam missed out on $ 70.2 million in potential revenue due to gross receipts tax exemptions , which had limited review or oversight . OPA noted the lack of official reporting of tax expenditures to substantiate the cost-benefit of such preferential tax provisions .
In its May 17 report , OPA found a $ 40 million property tax revenue hole resulting from unexplained credits and anomalous exemptions granted to private entities — many of them unidentified in the tax roll — from 2012 to 2016 .
In its most recent report , OPA found that only 1 percent of imported tobacco is taxed and collected upfront by the Customs and Quarantine Agency because the law allows five wholesalers “ authorized by DRT to delay tax payments on the tobacco stored in a warehouse under bond .” Due to lack of data , OPA had no way of knowing what fraction of the remaining 99 percent may have been collected or fallen through the cracks . OPA ’ s analysis of Rev & Tax ’ s data on tobacco tax collections indicated an underpayment of $ 142,000 by one taxpayer alone .
The total amount of revenue leakages identified in these three audits could go up if OPA could quantify the amount lost to ghost exemptions and under-the-table deals . At any rate , $ 111 million — plus the unquantified amount from mysterious credits and exemptions — would have covered the $ 67 million shortfall created by the federal tax cuts and the $ 75 million that governor wanted to borrow for the hospital .
Speaker Benjamin Cruz won ’ t take any more excuses from Rev & Tax , reminding tax officials that the Legislature has appropriated for over 40 vital positions to help plug the leaks .
In a nutshell , there is money right under the government ’ s nose . So quit poking the gun at us .
Publisher / Editor-in-Chief Mar-Vic Cagurangan publisher @ pacificislandtimes . com
Associate Editor Bruce Lloyd editor @ pacificislandtimes . com
Associate Editor ( Pacific Note / Palau ) Ongerung Kambes Kesolei okkesolei @ gmail . com
Palau Bureau Chief Bernadette Carreon carreon . bernadette @ gmail . com
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