Sales tax bill nets many questions from faipule
While the Administration's multi-year plan is to amend existing law, and propose new revenues and repeals to improve local revenue generation for the government, Manu’a faipule, Rep. Toeaina Faufano Autele told the ASG task force yesterday that unless the government can fix the leak, ASG will continue to face financial problems forever.
“We need to look at every corner of the government to see what is going on there. For example, the Office of the Samoan Affairs. Some villages have two pulenu'u sitting on good salaries doing nothing. It’s not the taxpayers' duty to provide money to pay those pulenu'u,” he said.
“Look at what happens every Friday. You see a lot of government employees on the roadside doing clean-up, but where are the pulenu'u? That’s their job. They were hired to look after their village and conduct clean-up around the island. I recommend to make each village pay for their own pulenu'u, and if they want to hire two or more, let them deal with it.”
Members of the ASG task force appeared before the House Budget and Appropriations Committee yesterday morning, to testify on the Administration’s proposed a 7% sales tax bill.
During the hearing, the task force was asked about the method the government will use to collect the sales tax, and who is responsible for the collections.
Deputy Treasurer of the Revenue Division, Keith Gebauer told the committee that the Tax Office will be responsible for collections, as stated in the bill, but it is the retailers' responsibility to submit their gross receipts, to make it easier for the government to do its job.
Gebauer said Tax Office employees have been working hard in the last two months, preparing everything before the legislation is passed, but added that there are some things that cannot be done until the bill is approved.
Such things include hiring of staff who can do the work, and also the procurement of the needed resources.
Rep. Vailoata Eteuati Amituana’i said if the sales tax is approved, the public will actually be paying 12% in taxes in the year 2018 - the 7% sales tax and the 5% miscellaneous excise tax.
The Governor's Executive Assistant, Iulogologo J. Pereira said the task force understands the concerns voiced by some of the committee members and also the public, but the whole purpose behind the sales tax, as recommended by Gov. Lolo M. Moliga, is to phase out the excise tax, while the sales tax is implemented to ensure that there is revenue coming in, when another revenue source is being completed repealed.
Rep. Veevalu Meauta Lauoi Mageo asked the task force what would happen if the Fono wished to amend the sales tax bill, starting from 2% and adding 1% for each year until 2022 - the same year the excise tax is expected to be completely removed.
Iulogologo said the suggestion is good, but the government needs the 7% sales tax to generate more local revenues.
Veevalu wondered if the task force considered any other type of tax to implement, instead of a sales tax.
Task force chairman, Attorney General Talauega Eleasalo Ale said they looked at all types of taxes, but at the end of their discussions, the sales tax was determined to be convenient and good for the government and the people of American Samoa.
House Speaker, Savali Talavou Ale chimed in, wanting to know what would happen if the House decided to let the Port fees and the excise tax remain, but drop the sales tax to a lower percentage.
Savali said he understands the many concerns raised by some faipule, the community, and mostly those from the business sectors; but on the other hand, the government is dealing with financial hardships, and leaders need to do something about it.
“We all understand that the government cannot operate without revenue, but at the same time, the community is begging their faipule to consider these revenue measures,” he said.
“How can the government survive if there is less revenue coming in? I know this is a very hard decision but we need to look ahead and consider making a solid decision, so that both the government and the community will benefit.”
In response, Talauega said the Fono has the authority to make any changes they want. Savali was quick to intervene, saying the House has not yet passed any amendments to the bill, but these were just suggestions.
Rep. Faimealelei Anthony Fu’e Allen told the task force that he is one of the many lawmakers who has received letters from some local businesses regarding the sales tax, and he believes the Fono needs to be very careful in their decision.
Treasure Uelinitone Tonumaipe’a said the task force worked hard to get the right number for the sales tax. “We considered every number."
He said 3%-6% is not enough, and 8% - 9% is too high.
"So 7% is the right number for our sales tax, so we can collect the $10 million we’re looking at every month.”
Vaetasi believes the government will never meet its goal if the Fono makes any changes to the bill. He told the committee that the government is relying on the people, but at the same time, the people will benefit from what the government is doing.
Throughout the course of the hearing, when House members would ask the task force about the reasons behind all of these revenue measures that are now before the Fono, this was the answer: “it was the recommendation from the governor.”
Toeaina told the committee that if all the revenue measures before the Fono are based on recommendations from the governor, he feels it’s about time for the committee to set up a hearing with the governor, so that he can provide the exact answers to the many questions the faipule are asking.