Excise tax increased as of Tuesday, this week — beer prices go up too
Pago Pago, AMERICAN SAMOA — The new miscellaneous excise tax — increased from 5% to 8% — as well as changes to the way import beer is taxed, became effective Tuesday this week, after the Fono approved the bill earlier this year.
In a Feb. 27th memo to freight forwarders, importers, and shipping companies, the Treasury Department’s Customs Division noted that the governor signed the bills that hike the miscellaneous tax and change the calculation of the beer tax into law on Feb. 23, 2018.
The effective date of both measures, in accordance to the language of the bills, is 60 days from the date of the governor’s signature. The effective date, according to the letter, is Apr. 24th.
“The purpose of this memorandum is to provide adequate notification for all stakeholders to plan and prepare for the impending changes,” according to the Customs Division letter, which Treasury Department provided yesterday in response to a Samoa News request.
Deputy Treasurer for Revenue, Keith Gebauer also provided to Samoa News, the Customs’ agenda meeting on Mar. 29th with port users, where the two measures and effective date, were discussed.
When it proposed hiking from 5% to 8% the miscellaneous excise tax, the Lolo Administration explained that the current rate has remained unchanged for many years and is in need of updating and adjusting to address new economic realities.
Additionally, the current 5% rate is insufficient to meet the growing costs of providing critical government services, including medical, public safety, and others.
Of the total revenues collected from the proposed 8%, 75 percent goes to the general fund; $1 million is earmarked for the scholarship fund; and the remainder is earmarked for repairs, renovations, and upgrading of all public school facilities and equipment beginning in fiscal year 2018.
The miscellaneous excise tax applies to all imports, which are used for commercial purposes or intended for resale.
Previously, the excise tax on imported beer and malt extract was 190% of the value, but under the new law, the excise tax is 35-cents per 12 fluid ounces, or fraction thereof, of beer and malt container offered for sale by the importer.
It basically means 35-cents per can.
The administration had argued that this new way of computing the ‘beer’ tax is fair for all beer importers.
ASG Treasurer Uelinitone Tonumaipe’a told lawmakers early this year that the new taxation sets a flat rate for beer. For example, it’s a flat rate of 35-cents per can, no matter the type or brand of beer.
Under the previous method of calculating beer tax, which the administration calls “sin tax”, ASG collected about $1.5 million just for beer alone.
So if the volume of imported beer increases, revenue collections will go up as well, he said.
In turn, some beer importers said the increase would hurt sales, which in turn will hurt ASG revenues from this tax, as they would order less. In the meantime, consumers will pay more at the tap.