Repealing taxes, reforming taxes and as promised — mo’ taxes
The Lolo Administration, as promised, has proposed to change the way the excise tax is imposed on imported beer, heavy equipment and secondhand goods, while imposing a new import tax on non-carbonated sugary drinks — which the government claims is a “health hazard” to local residents.
The proposed amendments were introduced last week in both the Senate and House, but won’t be taken up in committee until lawmakers reconvene Aug. 21st following their current 4-week midsession recess.
In his cover letter, which included language of the proposed bill to Fono leaders, Gov. Lolo Matalasi Moliga first points out that local excise tax laws have been unchanged for many years and are in need of updating and adjusting to address new economic realities.
He also says that the current 5% excise tax on miscellaneous items has diminished over the years.
Additionally, the excise tax on beer, heavy construction equipment, and secondhand goods imported into the territory “has been in need of reform to ensure proper enforcement.”
“Non-carbonated sugary-drinks presents a health hazard to the people of American Samoa and imposing an excise tax on these products is in the public's interest,” the governor wrote.
He explained that the reform and repeal of certain excise tax laws will provide Customs with better enforcement measures as well as relieving the tax burden on the public over time.
Because these laws have not been amended for many years and the clarifying language is urgently needed for effective collections, the bill becomes effective immediately upon passage by the Fono and approval of the governor, according to the bill’s language.
Currently excise tax on imported beer is 190% of the value with 110% of revenue collected going to the ASG general funding and 80% earmarked for and dedicated to the American Samoa Economic Development Authority for repayment of its Series 2015 Bonds.
Under the Administration’s bill, 20 cents of the new proposed tax goes to the general fund while 15 cents goes to bond repayment.
According to the bill, a 25 percent excise tax will be imposed on heavy construction equipment — which include but not limited to — track equipment, drill rigs, excavators, bulldozers, cranes, roller-compactors, tractors, graders, and front-end loaders. The bill clarifies that heavy construction equipment is designed specifically for executing construction tasks and will not be used for general operation on public roads.
MISCELLANEOUS EXCISE TAX
The bill, if enacted into law will repeal the “5% miscellaneous tax”, which is outlined in the law and applies to imported goods that are not specified in the law. However, the repeal process will be gradual, starting with 3% on Jan. 1, 2019 and by Jan. 1, 2022, there will no longer be a miscellaneous excise tax.
SECONDHAND IMPORTED TAX
Among the amendments being proposed to the “Secondhand Imported Items Tax” is the ‘Exemption for items imported for personal use’.
Under current law, any person making a declaration that secondhand items imported are for personal use, shall have the items delivered to the person without payment of the tax.
However, the bill seeks to add — “however, secondhand motor vehicles for personal use will be taxed at the rate listed in Section 11.1002(a)(3)(C)” — (this provision of the law states that excise tax levied on motor bikes, automobiles, trucks and vans imported for personal or family use shall be 10% of the basis thereof.)
Another amendment proposed by the administration is that the excise tax shall be “collected by Customs Officers upon arrival of the secondhand goods and before release from Customs custody.”
According to the ASG Revenue Task Force, during a presentation to some lawmakers early this month, the government estimates that it would collect $2.7 million annually on the proposed excise tax amendments on non-carbonated sugary-drinks, heavy equipment and secondhand products.
Several local businesses as well as consumers tell Samoa News that they hope the Fono will hold public hearings on these proposed changes to excise taxes. Two business representatives emphasized that any increase in the excise tax will be passed on to consumers “and that is just a matter of fact known for many many years.”