Roll back the Gross Receipts Tax. That was the outcry that followed the increase of the tax, which rose by half, from 4 to 6 percent of businesses' gross revenue. The increase went into effect in April and continued to weigh heavily in people's minds toward the end of the year, as reflected in a recently released survey. Pollster Market Research & Development Inc. said 70 percent of voters who responded to its survey disapproved or strongly disapproved of the tax increase in November, up from 65 percent in March.

At first, the majority of the dissenting voices came mostly from the same business organizations that endorsed some of the very same lawmakers who voted for the increase. Gov. Felix Camacho proposed the tax increase in February as part of the government of Guam's strategy to make up for a cash shortfall. GovGuam faced a $172 million deficit at the time the tax increase was proposed. As the impact of the increase rippled through to the wallets of consumers who started paying more — even for such essentials as gasoline, rice and cable TV — businesses were no longer standing alone against the tax increases.
Consumers joined the opposition. Also helping to amplify the call for a rollback of the increase were private-sector workers who worried about the number of employees their bosses can keep if the tax increase holds back consumer spending and cuts into businesses' bottom line.

Supporters of the increase have said that the tax increase should only have minimal impact on prices of goods and services and said that, for every dollar of purchase, businesses should only increase the tax from 4 cents to 6 cents. But businesses and some Republican lawmakers who oppose the increase have said the tax has a multiplier effect as the tax increase adds up in every step of the supply chain. For example, after a gasoline station increases its price because of the tax increase, a delivery truck owner that buys gasoline pays for the increase and then a store owner that is served by the delivery truck pays for the increase. In addition, each business in the supply chain also gets hit with a 50 percent increase in Gross Receipts Tax.

In the Legislature, some Democratic supporters of the tax increase have said keeping the tax increase would avert shutdown of certain government operations and avert massive local government layoffs that would weigh down the economy. Tax increase supporters in the Legislature also have said the increase ends after two years any way. But businesses and Republican lawmakers who want the tax increase repealed have also said that, given Guam's prolonged economic recession, consumers need relief, instead of being burdened further with higher taxes.

The end of 2003 does not give closure to the lingering Gross Receipts Tax increase issue. Although Republican lawmakers have failed in their earlier efforts to repeal the tax increase by supporting a voter-initiated call for a special election, the issue is expected to hover over lawmakers' and voters' minds this new year.

There's a move among Republicans to place the tax increase repeal issue before voters in the November legislative election.

And if the issue makes it on the November ballot, lawmakers in favor of keeping the tax increase may be in for a nasty surprise, especially if voter sentiment against the increase — as polled in the March and November surveys -- will hold or gain further steam.


By Gaynor Dumat-ol Daleno
Pacific Daily News

January 1, 2004

This article was published with the permission of the publisher of the Pacific Daily News, Guam. Any republication of this article without the explicit permission of the Pacific Daily News is in violation of federal copyright laws.



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