The Commerce Department is proposing a major overhaul to local statute dealing with business licenses and business license fees and the Chamber of Commerce has been asked to provide feedback before the proposal is finalized and sent to the Fono for consideration.

“It is clear that updates to the law are needed, particularly in this time of economic trouble. Any help to the business community should be welcomed,” said DOC in the executive summary of its 34-page draft proposal, which includes previous comments and feedback from the Chamber, who have been calling for major changes to create a “more friendly” business license processing in government.

One of the major changes proposed by DOC in the “Act to Streamline Business Licenses”, would delete the current business license fee rate, which has been in place for more than 20 years, and place the authority of setting up fees with the DOC director, with revenues collected placed in a special account.

STREAMLINE BUSINESS LICENSES

“Except for such fees as are established by this chapter, the Director shall by regulation establish fees for the issuance, renewal, or reinstatement of all business licenses and endorsements, provided that any fee required by any law or regulation in force as of the effective date of this chapter shall remain in effect until changed in accordance with this section,” the proposed change states.

“All fees collected pursuant to this section shall be deposited in a special account to be used to defray the costs of licensing and enforcement, including but not limited to salaries, training, equipment, and records,” it says.

A footnote in the proposal states that “by placing the fee schedule with the DOC through the rules, the new law will avoid situations like the one at hand where the fees are being debated in the Fono for the first time in 40 years.”

The footnote is referring to a measure submitted by the Administration early this year seeking to hike business license fees and permits for fund raising activities of non-profit organizations.

Senators have tabled this measure due to concerns over the drastic hikes being proposed.

The fee hike bill is one of four revenue measures submitted to assist the government with its expected financial shortfall for FY 2011, but the major concern among senators is that the rate hike is over 100% — and as high as 600% — for some business license categories. For example, the increase in pool hall fees, which is currently $25 per table, would be hiked to $175 per table under the proposed bill.

The Chamber of Commerce strongly opposes the fee hikes as well as other revenue measures by the administration saying that in the end, it is consumers who will pay for the extra costs.

According to DOC in its proposed legislation, fees should be calculated not to create revenue for the government, but to help offset the costs of the regulation. It also says that the new system anticipates an enterprise account to collect business license fees and would use those fees to pay for the business license division.

“This way, fees will be calculated based on the actual costs of regulation, not on the financial needs of the government,” it says.

Calling it “Smarter Fees”, DOC said timing of this draft legislation is largely due to a legislative battle between the Fono and the Executive over the amount of fees to be charged for licenses, with both sides seeming to argue that the fees need to be increased, but disagreeing over how the new rates should be calculated.

Samoa News will continue to report this week on other issues raised in the DOC draft legislation, including proposed changes to the review period of business licenses.