Capricious tax hike

Adelup has been spewing out hysterical press releases, warning of payless paydays, furloughs and possible cuts in government programs and services unless the Guam Legislature succumbs to its proposal to raise business privilege tax from 4 percent to 6 percent. It’s supposed to make up for the $67 million drop in tax revenue as a result of President Trump’s federal tax reform.

What is more appalling other than holding public services hostage and summoning the furlough bogeyman is the administration’s bid to avert a revolution by audaciously attempting to condition the taxpayers into believing that the proposed BPT increase is only 2 percent. "Anything less than a full, but temporary increase of 2 percent will have deep implications on the future of health care and our road to economic prosperity," Gov. Eddie Calvo said in his last State of the Island address.

It is 50 percent!

And while BPT (also known as gross receipt tax or GRT) is levied on businesses, the ordinary consumers will ultimately suffer. The governor knows this. When he was the Legislature’s vice speaker and chairman of the finance and taxation committee in 2007, he opposed the Camacho administration’s proposal to raise GRT from 4 percent to 5 percent. “When it comes to a GRT increase of 25 percent, that cost will pass along ultimately to the consumer and there is an issue especially for many of these construction projects that are going on now” he said in an interview with KUAM. “You have a set price and that includes the GRT of 4 percent - if you increase to 5 percent someone's going to have to absorb it."

To assume that the emergency temporary tax hike will pave “our road to economic prosperity” is a comedic hyperbole. It is only intended to bridge the gap that will be created by federal tax cuts.