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Senate bill earmarks 2% wage tax to assist LBJ

Senate President Gaoteote Palaie has sponsored four measures to assist the LBJ hospital’s financial situation, and among them is a wage tax increase.

All four bills are assigned to the Senate Budget and Appropriations Committee, chaired by Lemanu Peleti Mauga.

The bill that creates and institutes a 2% wage tax on all wages earned in the Territory, to be earmarked for operation of the hospital, is similar to the 2% tax bill the Fono passed last year to help the government in 2011 with its finances. The bill expired on Dec. 31, 2011; and the one proposed by Gaoteote would expire at the end of 2012.

According to the Senate's bill the 2% is in addition to American Samoa’s income tax as set forth; and employers shall immediately increase the minimum withholding for all employees from 4% to 6%.

If approved,  this wage tax is effective for tax year 2012, and revenue generated from this wage tax should be deposited to the treasury in a separate fund earmarked for operations of the hospital. The treasurer should transfer accumulated proceeds from this account to the ASMC account no later than the 5th of each month, according to the bill.

A 2% wage tax was noted in the governor's State of the Territory Address, delivered on Jan. 09, 2012. Gov. Togiola Tulafono said in his address that he plans to submit to the Fono for consideration and approval a new wage tax bill with revenues being collected to again assist the government, while the other revenue measures submitted last year by his administration, and pending in the Fono, also need to be passed or the "American Samoa Government (ASG) will remain in a deficit position" going forward. There was no mention of earmarking any of the taxes for the LBJ Medical Center.


The first measure would appropriate $1,600,000 to provide supplemental funding for the operation of the hospital and provide additional funding sources necessary to fully fund American Samoa’s earthquake and tsunami matching requirement to FEMA for disaster relief.

$800,000  would go to the American Samoa Medical Center for funding of its operations by reducing the funding shortfall in ASG’s  FY 2011 subsidy and $800,000 to the Public Assistance account for American Samoa’s FEMA earthquake and tsunami relief matching requirement, with any funds not necessary to meet the matching requirement to be reported and should be available for appropriation by the Fono.

The second measure is seeking to appropriate $253,000 in supplemental funds, with the funding source listed as from the estimated General Fund revenues for FY 2012 which are available as a result of line item veto actions.

A third measure seeks to appropriate $2,000,000 in supplemental funds, and it would be  made available to the hospital from the ASG’s interest in the Tobacco Master Settlement Agreement. The bill states this appropriation shall not lapse or expire until the appropriation amount is fully funded.

Upon the urgent need to fund the operations of the hospital, these measures shall be effective immediately upon passage by the Legislature and approval by the Governor.


The Senate president in a letter dated Dec. 12, 2011 to Gov. Togiola Tulafono outlined five alternative approaches to address LBJ Medical Center's financial woes.  Samoa News reported on this letter in its Monday, Dec. 19, 2011 edition.

Samoa News also reported on Jan. 10, 2012, the governor's response, in a letter dated Dec. 22, to the Senate president, saying that his administration was not supportive of these proposals.

None of the five proposals are what Gaoteote introduced in the four bills currently assigned to the Senate Budget and Appropriations Committee.