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Senators ask why 2% wage tax $$ withheld from LBJ

Treasurer Dr Falema’o “Phil” Pili says he’s withholding $2.8million in proceeds from the 2%wage tax, because those funds are questionable and his office is conducting a thorough investigation as the reports from the private sector on their 2%wage tax are not correct. His comments were made during a hearing before the Senate Budget and Appropriations Committee, on why the proceeds of the 2%wage tax were being withheld by ASG from the hospital.


“I don’t feel comfortable giving that money (to the hospital) when the reports from the private sector are not accurate. In the system there is no separation of the 2%wage tax from the total withholdings coming in,” Pili stated.


He further noted, “There are other reports that have been filed by the private sector with our office but they haven’t yet been paid to the government.”


As the Treasurer, he told the Senators, it doesn't feel right to sign over another check until the investigation is completed. Currently the research they are conducting is taking awhile, as there are many issues they have encountered and are trying to fix, which goes back to 2012.


“We may have overpaid the hospital, with that, I don’t think it’s right for me to write them a check until I’m certain the numbers are accurate,” said Pili.


The Treasurer said the hospital owes $6million to the general fund, $1.5million which ASG has paid for the premium for the insurance, while a $5Mil loan from Public Law 8-10 was given to the hospital and nothing has been paid. (The $5Mil loan is the ASG loan to LBJ in 2007 to pay down the hospital’s then debts. The LBJ hospital has asked the government to write off this loan several times, over the last few years — apparently to no avail.)


“I have not offset anything yet for these loans, but the money is there, $2.8 million, until the investigation is completed.”


Senator Mauga T. Asuega asked if there are any negotiations with the hospital on a repayment of what they owe ASG and Pili said they would discuss this matter with the hospital, for them to write ASG a check to offset what they owe, from the $2.8Mil (the 2% wage tax proceeds).


Puzzling, Pili then made it clear to the Senators that he has no intention of “offsetting” what LBJ owes to ASG with the money in question, because the law is clear the money should go to the hospital, however given there’s a current investigation going on, until that is completed he cannot give money to the hospital.


Senate President Gaoteote Tofau Palaie did not mince words when telling the Treasurer that according to the report he provided to the Senators a total of $7.3 million was collected from the wage tax and should have gone to the hospital, as that is what is stated in the law.


“You should understand that after paying the loan (the Workmen’s Comp loan), the proceeds will go to the hospital for its operation and the off island referral program. There’s nothing indicating that the proceeds will pay for any hospital loans.”


He urged the Treasurer to give the hospital what ASG owes them in accordance with the law and advised him to negotiate with LBJ on the loan he mentioned.


The Treasurer pointed out again that he has no intention of offsetting the $6million, and again said that until his office investigation is complete, and with his “fiduciary responsibilities as Treasurer” — he must wait for the results.


Gaoteote interrupted and his voice began to rise, saying, “Phil you have no authority to hold the money, if $7million was collected and the loan to the Workmen’s Comp is paid, the rest goes to the hospital. This law does not say you have the right to hold on to the money. No— the money must go to the hospital.”


He told the Treasurer that “whatever he was trying to explain about the hospital’s loans he does not want to hear it, but just give the money to the hospital.”


The Senate President then asked the Treasurer if the $7.3Mil on the report given to the Senators was only a projection.


Pili said, “We’re dealing with accounting on this matter. Whenever there is an entry that comes in when the 369 (tax form) is filed, whether the cash is received or not, it’s booked as a receivable and credit revenue, and when our reports are done we look at the revenue, whether the cash was received or not — that’s why this is this way. But I’m looking at it from the cash side, did the private sector ever pay the receivable yet? The answer is no. That’s why were going through the whole process in the accounting system.”




Senator Soliai Tupine then pointed out to the Treasurer that in the report there are three checks with the same check number of “698747”, all issued on Jan. 3, 2014.  The first one was   in the amount of $63,515.79; the second $65,932.37 and the 3rd for $64,688.80.


The Treasurer’s attempts to explain the issue were not taken well by Soliai, who stood up and walked to the Treasurer to show him the report, pointing out the said checks.


Pili explained those payments are made biweekly on each pay period.


Soliai then asked about the projections indicated in the report, however Chair Laolagi intervened, telling Soliai he was deviating from the subject at hand and must wait until later in the hearing to seek clarification on such matters.


Laolagi explained “there is no projected revenue on this report, however that’s one of the reports we are waiting on from Treasury.”


Soliai was not satisfied with the explanation by Laolagi, and asked Pili to provide the accounting reports of the payments to the hospital, so they can get a full understanding of the issue at hand and to prove the accuracy of what the Treasurer is saying— because as it states in the report—there are three different amounts, listed with the same check number.


In response the Treasurer explained, when there are times they miss making the payments, they then issue several checks to cover the missing payments to the hospital, so they will account for every pay period.”


Soliai said, “The more he explains, the more I’m confused.”


Laolagi then intervened and soothed Soliai, “This chamber is where our leaders are working, and as Chairman I'm trying to keep the peace between the Senators and the witness. I am not taking sides (Laolagi’s voice started breaking) — who does the government depend on — who —but us the Senators, as we are the father figures to ASG and the people. In case you (Senators) think that I’m taking sides with the Treasurer, no. As Chairman I’m in the middle so our hearing can be carried out calmly, as it should.”


Samoa News should point out that in the list of  “Payments to LBJ”, there are a total of three different check numbers that are repeated, using the same dates, but different amounts  for each repetition. It is not only Check #698747.


They are: CK 698788, 1/6/14 for $63,248.83 and $64,459.71 respectively; and CK 699598, 1/31/14 for $66,640.83 and $65,800.67 respectively.


More on this hearing in later issues of Samoa News.