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2% wage tax amendment passes in House, however Sanitoa says it's time to repeal this law

Rep. Larry S. Sanitoa

Pago Pago, AMERICAN SAMOA — With numerous increases in taxes and fees imposed on local residents in the last four years, Rep. Larry S. Sanitoa says it’s time to do the “right thing and give back the 2% wage tax” to workers, by repealing this law.

Sanitoa’s comments over the weekend come after the House last Friday approved in final reading its version of the administration bill, which seeks to amend the current 2% wage tax law by re-allocating 50% from the off island medical referring program to the Governor’s Health Initiative, while the other 50% remains for LBJ Medical Center operations.

Before approval, the House amended its version of the bill by reducing to 25% the percent for the governor’s initiative and increases to 75% the allocation for LBJ operations.

Sanitoa along with Rep. Andra Samoa were the only two lawmakers present at last Friday’s final vote who cast “no” votes on the bill.

The governor wants to set up special funding for the initiative to send local Samoan students to obtain medical degrees in Fiji. The Senate has already rejected its version of the bill.

“While the intent of the legislation is understandable, there are still several unanswered questions on whether we have explored all our options,” Sanitoa said over the weekend. For example, in the past under the Department of Public Health, “many of our men and women were able to attend medical school programs in Fiji” and this program was paid for by the World Health Organization (WHO) —which to date still offers this program.

Furthermore, ASG has a scholarship program which “we can consider looking at for students who would like to take up the medical profession.” He points out that the scholarship board can work with LBJ and DOH on requirements, standards and oversight of the funding.

“In addition, there is funding currently under the Governor's Special Program account which has been earmarked for students who want to pursue the medical profession,” he said.

In reference to the 2% wage tax, “in 2014, some of my colleagues and I introduced legislation to repeal the 2% wage tax due to various reasons,” he said. “The proposed legislation was never acted on because of the uncertainties at that time with LBJ's revenues.”

He also said that in 2019, LBJ's financial reports reflected they had $6.9 million in surplus. Additionally, LBJ's FY 2020 1st Quarter Performance report is showing a surplus of $3.3 million. Furthermore, $84 million in new Medicaid funding — for the years 2020 and 2021 - with a reduced matching fund of only 17% is also good news for LBJ.

“However, most concerning now are the reports of LBJ writing-off $6.4 million of the 2% wage tax owed by ASG; and this is troubling and needs further discussion by the Fono,” he said.

According to the Tualauta faipule, there “have been numerous increases in taxes and fees over the past four years that have adversely impacted our people's disposable income, especially those of our low income families. It is time for us to do what is right and give back the 2% wage tax. We will be introducing legislation soon to repeal this tax.”