Tax Office Mgr concerned over tax revenue projections

States he was not consulted about the revenue estimates in the FY 2013 budget book

ASG Tax Office Manager Melvin Joseph is projecting a surplus in tax revenue collections in the current fiscal year 2012, which ends next month, September 30. However, he has concerns that the tax revenue projections for the new fiscal year may be on the high side.

Joseph was called yesterday before the Senate Budget and Appropriations Committee, whose chairman Sen. Lemanu Peleti Mauga, told the ASG official that the governor’s letter to the Fono calls for an increase in tax collections revenue that will help fund the FY 2013 budget proposal.

Under the FY 2013 budget proposal, total estimated tax revenue is set at $52.10 million and the Tax Office is charged with the collection of corporate taxes, individual income taxes and the military cover over tax — which totals $32.10 million. Customs Division collects the rest of tax revenue — general excise taxes and soda tax.

Information he provided to Senator’s states that $27.5 million was budgeted in FY 2012 for individual income taxes; corporate taxes and military cover-over while total revenue collected so far for these taxes stands at around $32 million.

Joseph says the Tax Office is looking at almost $5 million in “excess” of tax revenue in FY 2012 as compared to the budgeted amount.

Lemanu explained that the Senate committee needed additional information from the Tax Office or a thorough explanation, especially on the major increase projected in FY 2013 compared to the current fiscal year.

Joseph said that in FY 2012 there was a lot of federal money that poured into the territory through the Section 1602 low-income housing program and the American Recovery and Reinvestment Act (ARRA) funds.

“I don’t see that rolling into [FY] 2013,” said Joseph, referring to the two federal programs, adding “unless someone knows something else” of which he and his office are not aware.

He reminded senators that the last time that $32 million was budgeted to be collected in individual, corporate and cover over taxes was in FY 2009 but that fiscal year ended in a deficit of $3.4 million.

Responding committee question, which was raised several times, Joseph said he “was surprised” to see from the budget document proposal given to him yesterday morning, the high revenue estimates for FY 2013 in taxes collected by the Tax Office. He also stated that he was not consulted about the revenue estimates in the budget book.

Joseph was also asked several times for his forecast or his projection for FY 2013 tax revenue collections under the Tax Office’s jurisdiction and Joseph gave the same reply, “In my opinion, I think it’s $4 million or $5 million high.”

“I think the forecast is large, very large,” he said and emphasized several times to the committee that this is his own “personal opinion” without conducting an analysis of the FY 2013 budget.

Asked to give reasons for saying that the forecast is high, Joseph said he believes that the increase in tax collections in FY 2012 is not going to be duplicated in FY 2013 because the two federal programs — Section 1602 and ARRA funds — are not expected again in the new fiscal year and the world economic crisis will in the end filter down to American Samoa impacting local revenue. 

Despite the increase in tax revenue collections in this fiscal year, the committee asked Joseph if there are things that have had a negative impact on ASG revenue collection, when it comes to local revenue, and his reply was the American Samoa Power Authority being a fuel supplier — not paying corporate tax as a fuel suppler — and the “tax exemption” process.

Asked how much in ASG revenue has been lost with ASPA being a fuel supplier, Joseph said, that he cannot disclose specific details due to confidentiality issues under the statute but he suspects it’s in the millions of dollars.

He also said that the government is losing millions due to the tax exemption process. One of the committee members wanted to know if Joseph is a member of the Tax Exemption Board and he replied that he is an advisor to the board, which does not have to take his advice.

Towards the end of the hearing, the committee thanked Joseph for shedding some light on the tax revenue projection for ASG in FY 2013. Joseph told the committee that he wants to answer the questions honestly and again reiterated that any responses to the FY 2013 proposed tax collection revenue is “based on my own personal opinion.”


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