Neil's Ace Home Center calls for thorough review of proposed taxes
In a letter to “government leaders”, Neil’s ACE Home Center shared its views on three revenue measures proposed by the Lolo Administration, and the more than 30-year-old family-owned company is calling for a thorough review of the proposed taxes, which they say will burden consumers.
The Sept. 5th letter, signed by President and CEO, Ngaire Ho Ching, notes the company’s official position on the three proposed revenues measures, which they claim “will significantly impact our business, the business community, but most importantly, the consumer.”
While the company understands the “financial hardship” experienced by the government, Ho Ching said, “We strongly believe the proposed measures need more thorough review before rolling out.”
Regarding the proposed 7% sales tax, Ho Ching said specific information needs to be disseminated to the public and the business community on how the sales tax will be collected.
She noted that some businesses have more advanced POS (point-of-sale) systems than others, so the 7% separation for these businesses is easily identified.
“Unfortunately for smaller businesses, it will be very difficult to track,” she explained, and noted that as a business owner, “I need to know this will be fair for everyone, with specific collection methods and processes in place that give accountability to all businesses regardless of size.”
The company feels the sales tax should be rolled out gradually for the consumer, starting with a lower sales tax percent, because “7% is too high” and suggested 2% as a start while we ensure the collection method works, she wrote.
“If we already have problems with businesses with questionable and/or fraudulent reports, then charging the consumer 7% sales tax is opening up avenues for temptation for additional income for said businesses that will still not be reported correctly,” she pointed out.
The company feels that the sales tax should replace the import tax, and not be an additional tax on top of it, she said.
Ho Ching also suggested that the sales tax should apply to online orders and imported goods . (Samoa News points out that applying the sales tax to online orders has also been suggested by others in the private sector, and the ASG Revenue Task Force says they are looking into the issue as well.)
“Strong initiatives and pushes have been made to buy local, but if we implement the 7% tax, we will discourage buying locally,” Ho Ching said. “We must ensure this sales tax is paid on imported consumer goods like building materials, lumber, tiles and appliances.”
“These are products that affect our hardware industry that consumers have brought in of their own accord, some with container loads,” she explained. “To be fair, these online orders or imported consumer goods must be taxed.”
The Administration is proposing to hike fees and charges at the Port, with the Port Administration director having the authority to review such fees and charges every five years.
Neil's Ace Home Center disagrees with giving the Port director sole authority or discretion, said Ho Ching, who said this is not a decision to be made by one person alone.
“Shipping costs, cost of fuel and such are already at a high rate,” she wrote. “Our concern is that increased port fees will further discourage outside investment as it will be too costly for businesses to operate here.”
She continued, “These costs will be passed from the shipper to the consumer.”
Another administration revenue bill, the 1% alternative minimum business tax (AMBT), which the government estimates will bring in about $2.3 million annually, applies to corporations and other entities subject to taxation in American Samoa.
Ho Ching said their company does not support the AMBT “for the simple reason that a business that has an honest loss would now be forced to pay a minimum 1% tax on their gross receipts, driving them further in debt and possibly out of business.”
“This is true for startup businesses that struggle the first few years of operation,” she continued, adding that implementing the AMBT will discourage new business development and discourage new entrepreneurs.
She suggests that the Tax Office monitor the suspected business if they file losses year after year and perform audits to ensure their information is correct, “rather than penalizing across the board.”
Ho Ching reminded government leaders that Neil's Ace Home Center has been part of the local community for over 30 years and understands that the “success of our business is a partnership between the government and the community.”
“However, we have not received enough information on the revenue measures [sales tax, port fees, and AMBT] to fully support these initiatives,” she wrote and asked government leaders “to ensure these proposed revenue measures are fair for everyone. And ultimately, be affordable for the consumers to absorb and support.”
Copies of Ho Ching's letter were sent to Fono leaders as well as several lawmakers who are members of the Budget committees and Ways and Means committees in both the Senate and House.
Another local company, G.H.C Reid & Company, also sent a letter to lawmakers voicing their views and suggestions on all five proposed revenue measures from the administration last month.