Ads by Google Ads by Google

Increase of Port fees and wharfage charges signed into law

[SN file photo]
Also signs 1% alternative business minimum tax (AMBT) legislation

An increase in port fees and wharfage charges went into effect on Oct. 30, which is when Gov. Lolo Matalasi Moliga signed into law legislation passed by the Fono. And two officials in the private sector expect that these new hikes will start affecting consumer goods either later this month or early next month, in the midst of local holiday shopping.

In signing the bill into law, Lolo informed Fono leaders that port fees have not been changed in over 30 years, during which time the costs of maintenance, equipment, human resources and services have increased dramatically.

“As a part of the administration’s overall revenue enhancement initiative, increasing port fees to a more realistic level, much closer in line with other ports in the Pacific region, will help put the government on a more sound financial position for which I am grateful,” he wrote and thanked the Fono for approving the measure (which is of the five revenue bills submitted by the governor to the Fono).

The only change the Fono made to the this measure was deleting the provision which requires the Port Administration director to review port fees and charges every five years.

Lawmakers — as well as senior officials of the private sector who either testified or submitted written letters to the Fono — believe that one person making decisions on port fees was not appropriate. However, ASG witnesses had explained that any proposed fee increase is subject to regulatory review, which includes public hearings.

Private sector senior executives had also testified or provided written statement to the Fono opposing the increases because such hikes would in the end be passed on to consumers, who would then spend less.

Senior officials of two local businesses told Samoa News last week that they believe the new increases will “seriously” affect holiday shopping, especially for any shipments that came arrived in Pago Pago after Oct. 30th.

Before the new increases went into effect, ASG collected about $4.55 million annually on port fees and charges, according to the ASG Revenue Task Force data presented to the Fono in July. Under the new law, ASG is estimated to collect over $2.55 million in new revenue every year (or a total of $7.11 million annually).

The governor’s letter to the Fono regarding his approval of increases in port fees, gave the impression that the the Administration is looking at submitting more revenue bills next year when the Fono convenes in January for the 3rd regular session of the 35th Legislature.

“We look forward to working with the Fono leadership on further revenue enhancement and individual tax relief measures” before the start of the 3rd regular session, Lolo wrote.

The administration, already has one individual-tax relief measure pending in the Fono, and that is upgrading the individual income tax table. The Senate had swiftly passed its version of the bill during the 2nd regular session and sent it to the House where it remains in committee along with the House version.

Meanwhile, the governor also informed Fono leaders — in a separate Oct. 30th letter — that he has signed into law the establishment of a 1% alternative business minimum tax (AMBT) legislation, which goes into effect on Jan. 1, 2018.

ASG had claimed that many businesses have avoided paying their fair share of corporate taxes despite posting substantial annual gross revenues year after year. Therefore, ASG argued, the establishment of an AMBT is in the public interest as it will ensure that all corporations pay a fair share of corporate taxes.

Private sector executives have argued against the measure, saying that the AMBT punishes honest businesses that pay their corporate taxes and suggested that the ASG Tax Office conduct audits of businesses suspected of being dishonest.

According to the bill, businesses that start up during a given taxable year will be exempt from the AMBT for the initial taxable year and the following taxable year only. The AMBT does not apply to non-profit corporations. ASG estimates to collect about $2.3 million under the AMBT.

Samoa News will report during the week on two other Administration bills — changes to the miscellaneous excise tax and FY 2018 supplemental appropriation — which were vetoed by the governor.