Fono 'compromise' passes all tax hikes sought by admin, plus
A Conference Committee of three members from each Fono chamber convened yesterday to debate changes the House made to the Senate version of an Administration bill seeking to make several changes to provisions of local statute pertaining to excise taxes.
The conference was called after the Senate rejected House amendments and in the end, committee members reached a compromise and issued a report that was approved and adopted yesterday by the Senate.
Also yesterday, the Senate passed in second reading the government’s $11.34 million fiscal year 2018 Supplemental Budget which was introduced in both the Senate and House on Tuesday.
However, in the House, a decision on the conference committee report is delayed until today’s session.
Both chambers must agree and adopt the Conference Committee report in order for the bill to be officially approved by the Fono.
Among the changes to local excise tax laws proposed by the Lolo Administration is the repeal of the 5% miscellaneous excise tax over a period of time. The Senate last week approved its version of the measure — with several amendments — which includes keeping the miscellaneous tax, but hiking it by another 5% up to 10%.
The Senate also added to its version of the bill a provision repealing the current 2% wage tax, which is paid by all wage earners in the territory.
The House amended the Senate version of the bill, by putting the total miscellaneous excise tax at 8% and deleting the section that repeals the 2% wage tax.
The Senate early this week rejected House amendments, which resulted in a Conference Committee being called.
Senate conferees were Sens. Magalei Logovi’i, Nuanuaolefeagaiga Saoluaga Nua and Tuaolo Manaia Fruean. House conferees were Reps. Vailiuama Steve Leasiolagi, Toeaina Faufano Autele and Lavea Fatulegaee P. Mauga.
Magalei, who is chairman of the Senate Budget and Appropriations Committee, explained the reasons behind the Senate’s amendments and other details to support its reason for hiking the miscellaneous tax up to 10%.
The House conferees were given a chance to explain their amendments, with Toeaina saying that many questions were asked of the ASG Revenue Task Force — who came up with the five proposed revenue measures — but not all of them were answered.
He said the government has presented new revenues measures, but there is no effort in reducing expenditures.
Tuaolo interjected and asked the House conferees to explain the reasons behind their amendments. Toeaina suggested keeping the wage tax in place but for the government to enforce collection.
“So is that your compromise? To keep the wage tax?” Tuaolo asked, to which Vailiuama, who is the House Budget and Appropriations Committee chairman, responded that the wage tax is repealed by the House as part of its amendment made to the Administration’s 1% alternative minimum business tax (AMBT).
To save time, Tuaolo suggested starting a “compromise” debate with the 3% that the House added on to the 5% miscellaneous tax, saying that the AMBT bill is not part of the debate.
Nuanuaolefeagaiga recalled what senators had stated last week that it's easy to collect the excise tax, since it's carried out at the dock, while the government is faced with difficulty in collecting the wage tax. He questioned whether the Tax Office will fully be able to collect the 1% AMBT, when ASG is having trouble collecting the wage tax.
Tuaolo then offered his “compromise”, which is to accept the 3% the House added to the 5%. “Politics is an art of compromise,” said Tuaolo, adding that he would prefer not to see both chambers taking too long to reach a decision.
Vailiuama said the House's decision on the 3% increase in the miscellaneous tax was not an easy task.
After a back and forth debate, the conferees reached a compromise, after which Magalei revealed that the Senate will move forward with the Supplemental bill.
Major amendments approved by the conference committee include an increase from 5% to 8% for the miscellaneous tax, and repealing the 2% wage tax.
Additionally, all revenues collected that are not specifically earmarked for any purpose will be deposited in the general fund, and the bill is effective immediately upon passage by the Fono and approval from the governor.
Samoa News notes that the excise tax bill also includes provisions that establish a new non-carbonated sugary drinks tax; amends beer tax to volume, not value; amends tax on importing secondhand items (such as used cars), and imposes a new tax on imported heavy construction equipment.