House testimony on room tax similar to what was heard in Senate
Some faipule are supportive of an administration bill calling for a 5% occupancy or room tax, which Commerce Department director Keniseli Lafaele says will not deter nor decrease visits to the territory by business travelers, federal government workers and military officials, as they would still have to pay this tax, even if it's increased in the future.
Lafaele, along with ASG Treasurer Uelinitone Tonumaipea and Attorney General Talauega Eleasalo Ale appeared last week before a House committee reviewing the 5% tax for hotels, motels and other lodging places in the territory.
Similar to his testimony in the Senate last Wednesday, Tonumaipea told House members that 75% of the tax will go to the Department of Port Administration’s Airport division, which has been faced with a $1.5 million budget shortfall annually
Some lawmakers voiced their support of the bill saying that this is long overdue, and even suggested raising the tax to 10%, because 5% is a small amount. For example, if a room is $99 per night, 5% of that is only about $4, which is not a lot of money to be collected.
However, Talauega said the ASG task force that is working on new revenue measures had discussed both 5% and 10%, and agreed to the 5% as a starting point, while in the future, the government could look at increasing the tax to 10%.
Responding to Vice Speaker Fetu Fetui’ Jr.’s questions, Lafaele said visitors to the territory are mostly business travelers — including federal government and military officials— and these types of travelers will continue to increase, even with a 5% tax, they will pay the room tax. He said there are just a small number of visitors who are “tourists”.
On the issue of limited airlines to the territory, Lafaele said the government is working on increasing airlines to operate in and out of Pago Pago. Additionally, there is also hope that another hotel will be set up at the current location of the old Rainmaker Hotel, which is now being cleared away.
Fetui said he believes that any tax should be across the board, not just for room tax, which will end up hurting the hotel and motel industry. He also said that American Samoa should not be compared to Samoa, which has a large tourism industry with many hotels and other types of lodging.
According to the Manu’a lawmaker it appears that the government has run out of options to generate revenue, and is now focusing on just one industry.
Talauega explained that room tax is “new revenue, new money coming into the local economy” and the room tax is the visitor’s contribution to the local economy. He also says that the governor wants American Samoa to create new revenue sources locally instead of depending on federal funding.
Hopefully in the future American Samoa will have more hotels and motels that will result in the increase of revenues from this tax proposal, he said, adding that apartment buildings are not included in the room tax.
It was acknowledged during the House hearing that local residents also end up spending the weekend at hotels and motels, andt they will also have to pay this tax if the bill is enacted into law.
Samoa News reporters Fili Sagapolutele and Ausage Fausia contributed to this report.