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Remember the 2% wage tax for LBJ? It's not going to the hospital

Rendering of proposed new Fono Building [SN file photo]
Faipule say ASG is holding LBJ hostage for a 2003 loan

Pago Pago, AMERICAN SAMOA — The House Budget and Appropriations Committee met to discuss two House bills yesterday morning.

One bill appropriates $198,621 to fund the local share of the cost of purchasing eleven 2018 Harley-Davidson police motorcycles (see separate story for details), and the other is a bill repealing a 2003 law in which the government loaned $5 million to the LBJ Medical Center.

Deputy Treasurer Tina Va’a was a witness during the hearing, chaired by committee chairman, Rep. Vailiuama Steve Leasiolagi.

According to the preamble, the American Samoa Government has long desired to forgive and write-off a loan it provided to the American Samoa Medical Center in 2003 in the amount of $5 million.

"So that both ASG and ASMC can provide more accurate accounting and reporting of their finances, this bill shall become effective upon passage by the legislature and approval by the Governor."

However, during the hearing, faipule found out that Treasury is using the loan as an excuse to withhold 2% wage tax revenues that are earmarked for LBJ, as well as delay sending the hospital its monthly ASG subsidy.

Va’a explained to lawmakers that this loan has been on the government’s books for many years and in order for the loan to be written off, appropriate legislation needs to be enacted into law.

She said the loan was made when LBJ was in a financial bind, and it must be paid back to ASG.

House Speaker Savali Talavou Ale asked if ASG owed any money to LBJ, and Va’a said yes — ASG is still holding over $4 million from Fiscal Year 2016 that was supposed to be paid to LBJ. She said it was the Treasurer’s plan to use this $4 million from the 2% wage tax to offset the $5 million loan LBJ owed to ASG.

Savali said it’s really sad to hear that not only is LBJ not paying the loan, but they are also not receiving the full amount from ASG under the 2% wage tax.

“We can’t act on this bill to repeal the $5 million loan if ASG also owes LBJ more than $4 million from the wage tax,” Savali said.

Fetu did not mince words when telling the deputy treasurer that ASG has no authority to withhold any cent collected from the 2% wage tax that was passed by law for the LBJ.

Manu’a faipule, Rep. Vesi Talalelei Fautanu Jr., the House Health Committee chairman, voiced the same concern, saying that although ASG owes money to LBJ, the hospital is still in operation, doing its best to serve the needs of the community.

“We don’t have enough supplies, not enough doctors and nurses and many other needs because LBJ can’t afford it with the little money they have, but look at this huge amount of money ASG owes the hospital. It’s sad but my hat goes off to the LBJ management and staff for putting forward good work every day,” Vesi said.

Rep. Faimealelei Anthony Fu’e Allen, a member of the LBJ Board, shared the same thoughts. He said ASG is holding LBJ by the neck by not paying the $4 million from the wage tax because of the hospital's $5 million loan.

He said the law is clear, all money from the wage tax must be paid to the hospital, but it’s very sad to hear that not only is ASG not paying the wage tax to the hospital, the ASG subsidy is not being paid on time as well.

(Samoa News should point out that the position of the current government is that “subsidies” to any department, agency or semi-autonomous agency are only paid when there is enough money to pay them — it is not an ‘obligation’.)

The committee will now wait for Treasury to provide all the reports they need, before they render a decision on this bill.