Governor directs for public input on proposed GRT
To get the “pulse of the community” regarding the proposed gross receipt tax (GRT), Gov. Lolo Matalasi Moliga has suggested the Treasury Department take their pitch to the public — including a presentation to the Fono — to provide a full explanation for better understanding among members of the community on this proposal.
The GRT calls for a five percent tax on all gross receipts for all businesses and semi autonomous entities, including non profit organizations — except religious groups, i.e. the churches. This will result in the elimination, in three years time, of the territory’s Corporate Tax, according to ASG Treasurer Falema’o ‘Phil’ M. Pili, who says it's the highest in the world.
During the Treasury Department’s presentation of the GRT proposal at last Friday’s cabinet meeting, Pili said the current corporate tax rates are so high that it’s difficult to attract new businesses to the territory but this proposal “will sent shock waves to all the interested companies off island” and they would want to invest in American Samoa “because of its tax haven, [if] there are no corporate taxes.”
Pili also says the GRT needs the governor’s approval before it's moved forward but some cabinet members sought more information about the proposal and others were concerned with its impact on the private sector as well as ASG entities that would be included in the GRT.
“I’m still not yet convinced that we should move forward on this proposal and that’s why I asked the Treasurer to take it up with the cabinet [first],” Lolo told directors, who were asked to provide their input on this proposal, which will be presented again by Treasury during another cabinet meeting.
David Robinson, who attended the cabinet meeting as chairman of the ASG Shipyard Service Authority, said the proposal “is going to put a very severe amount of pressure on small businesses to come up with that sort of funding right away” as they are already required to front the payment on 5% excise taxes.
Another director agreed with Robinson, asking whether Treasury had spoken to the private sector and conducted focus group discussions as to how they feel about the GRT.
Pili said his department had done six months of research and study on this proposal before it was presented to the governor. He says it was the “general consensus” from the business community that there is an “uneven playing field out there” with everyone not paying their fair share of the taxes.
Lolo added, “this is only phase one of the five-phase process” before any action is taken on the proposal and this is the reason why he asked the Treasurer to make a presentation to his cabinet.
“Remember the people who will be affected in the community, [are] the residents of this territory. It doesn’t matter where we place the tax, the bottom line, they [are the] ones to pay the taxes. When we have taxes, the businesses will pass them over to the public,” he said. “But at the same time, we have to be mindful [as to] how we can raise money to run this government.”
Lolo suggested for Treasury to take this proposal to the community — to a college assembly, to the village level, to the Fono and the business community to gather input. ”You have to feel the pulse of the community and the Fono before we can even start,” he said.
The governor also says he will seek a legal opinion from the Attorney General on this issue.
Meanwhile, Robinson, who is also chairman of the local Chamber of Commerce, has asked Chamber members to provide their written concerns about this proposal from a business perspective as soon as possible so that the information is compiled for the Treasurer’s attention.
“There are many issues surrounding this proposal which will impact negatively on the business sector if the GRT is passed into law and I have asked the Treasurer to address the Chamber membership as soon as possible so these issues can be explained in detail, and he has agreed to do this,” he wrote this week to Chamber members.
The Chamber is working out a date for Pili to address the group. (See Wednesday’s Samoa News edition on reaction from Robinson regarding the GRT proposal.)
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