The Senate has reduced the excise tax for imported non-carbonated sugary drinks and hiked the current 5% miscellaneous excise tax. The changes are included in the Senate version of an Administration bill, which seeks to amend several provisions of local excise taxes.

The measure was approved during third and final reading yesterday.

Also approved in final reading yesterday by the Senate is the House version of the fiscal year 2108 budget, which the Senate amended by hiking the Fono’s budget by $500,000.

EXCISES TAX

The Administration had proposed several amendments to local statute, dealing with excise tax. Among them is the gradual reduction of the 5% miscellaneous excise tax over a period of time.

The Senate amended its version of the bill by hiking it up another 5% to a total of 10%, with the effective date set for Jan. 1, 2018, which is also the same time the current 2% wage tax is repealed.

The Senate made clear in the bill that “revenues from the 10% excise tax shall be deposited in the general fund for appropriation by the Legislature.” Except that $500,000 from this excise tax goes towards the ASG student financial aid (or the ASG Scholarship Fund) and one-percent is earmarked for repairs, renovations, and upgrading of all public school facilities and equipment in American Samoa.

Another provision proposed by the administration in the bill, establishes a tax of 15-cents per 12-fluid ounces or fraction thereof, for all non-carbonated sugary drinks for sale by the importer.

However, the Senate reduced the tax down to 5 cents per 12-fluid ounces.

GHC Reid & Co., a major beverage distributor on island, had argued during a Senate hearing early this month that the tax is too high and this is now the same as carbonated drinks. They suggested a lower percentage for this category, being the healthier alternative. South Pacific Distributors (SoPac) echoed this point of view.

But G.H.C Reid and SoPac disagreed over the Administration’s proposal in imposing the tax on imported beer.

Currently, excise tax on imported beer is 190% of the value, but the Administration is seeking to amend it to 35-cents per 12-fluid ounces, or fraction thereof — basically it means 35-cents per can.

The Senate kept this proposed amendment in place without any changes: 35-cents per 12-fluid ounces, or fraction thereof. The Administration argued — and G.H.C Reid agreed — that the new tax method prevents fraudulent invoices being presented to Customs.

Also left unchanged by the Senate is the Administration’s provision, imposing a 25 percent excise tax on heavy construction equipment. 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.

The Senate version now goes to the House where its version is pending in committee.

SENATE CORRECTS AMENDMENTS ON BUDGET BILL

The Senate last Friday approved in second reading the House version of the fiscal year 2018 budget, with what they said are the correct amendments, reflecting the right funding source of the $500,000 that the Senate added to the Fono’s FY 2018 Basic Budget.

Prior to that, during last Thursday’s Senate session, the one-page document distributed to senators from the Senate Budget and Appropriations Committee shows five projects under the Special Program, that will be cut and become the source of funding for the $500,000. The amendments were approved and included in the Senate version of the budget bill.

At last Friday’s session, the House version of the budget bill was presented for approval in second reading, including amendments, that were a little different than those presented on the floor last Thursday.

It was revealed during Friday’s session that the document with amendments distributed to senators on Thursday was mistakenly passed out at the time.

Therefore, the correct amendments were contained in another committee document distributed to senators at last Friday’s session. According to the correct amendments — $200,000 each is cut from the Road Maintenance Fund and the Western District Youth Multipurpose Center; and $100,000 is cut from the DPS Law Enforcement.

The $500,000 cut from these three projects under the Special Program, is reallocated to the Fono, which hikes their budget up to $7.41 million.

The correct amendments were approved and added to the House version of the budget bill, which was approved in third and final reading yesterday. The House version now goes back to the House and if they disagree with the amendments, a Conference Committee of both chambers will be called to iron out the final language of the budget bill.

The Senate version of the budget bill remains in the Senate at this point, while the House version moves forward.