Gov’t priority, once again: Levy higher taxes to finance its spending
Gov. Lolo Matalasi Moliga is proposing, through legislation introduced last week in the Fono, to change how the excise tax is applied to imported beer, saying the current method “may be easily manipulated.”
It is not a new proposal, as it was initially submitted as part of a larger legislation in the last session, but vetoed by the governor due to changes made by the Fono to certain parts.
Included in that legislation was a proposal to repeal the 5% miscellaneous excise tax over a period of time; levy a new excise tax on heavy construction equipment and second hand imports; and levy a new excise tax on non-carbonated sugary drinks.
The governor vetoed the legislation due to amendments made by the Fono, especially to the 5% miscellaneous tax, which lawmakers hiked from 5% to 8%. (See Samoa News Nov. 7th edition for details on the governor’s veto.)
In the new bill, which was submitted as a ‘stand alone’ — not part of a larger legislative package — the administration is once again seeking to amend the calculation of excise tax for beer and malt extract.
According to the Administration, current excise tax on beer and malt extract, which is based on the reported value of the imported item, “may be easily manipulated... to reduce the amount of excise tax” due to ASG.
This practice deprives ASG of much needed revenues to operate and provide critical public services such as medical and police services, according to the bill’s preamble.
To avoid these issues, the excise tax on beer and malt extract is amended to provide a flat rate based on the amount or volume of the imported item instead of its stated value.
Currently excise tax on imported beer and malt extract is 190% of the value, with 110% of revenue collected going to the ASG general fund and 80% earmarked for and dedicated to the American Samoa Economic Development Authority for repayment of its Series 2015 Bonds.
Under the Administration’s proposed amendment, the excise tax is 35-cents per 12 fluid ounces, or fraction thereof, of beer and malt container offered for sale by the importer. Twenty cents goes to the general fund while 15 cents goes to bond repayment.
The 12 fluid ounces or fraction thereof, basically means 35 cents per can.
Effective date of the proposed amendments is 60-days after the end of the session in which it is passed, according to the bill’s language.
So far the Senate has schedule a hearing on the measure for Wednesday. It wasn’t immediately clear when the House will hold its hearing.
During Senate committee hearings last September there was strong support from G.H.C Reid & Co. Ltd., saying taxing by volume is “even and fair... for all beer products” while South Pacific Distributors (SOPAC), disagreed with the new government method of calculating the beer tax.
According to GHC Reid's testimony before the Fono, the current method of taxing imported beer “is open to manipulation.”
And by changing the calculation of tax, it aligns local tax calculation to the global community which uses a volume-based calculation and not percentage of invoice. Countries using this format include the US, Australia, Fiji, New Zealand, and Samoa.