Business privilege tax cut proposed anew
Sen. Wil Castro has introduced a bill that would temporarily reduce Guam's business privilege tax from 5 percent to 4 percent-- a recurring proposal that has repeatedly received a lukewarm response from the legislature and rejection from Gov. Lou Leon Guerrero.
The BPT cut proposed under Bill 348-35 would apply to businesses that have “remained opened for service and maintained employees on its payroll during the Covid-19 state of emergency declaration issued by the Governor of Guam.”
The bill further proposes that realized savings be “applied to employee compensation or benefits including, but not limited to, salaries and wages, and differential pay, such as hazardous or other specialty pay.”
“Thousands of active private workers risk exposing themselves and loved ones to the coronavirus, so it is fair to compensate them at a level similar to their public-sector colleagues,” Castro said. “We owe it to our private workforce who, in addition to public-sector front-liners, place themselves at risk of exposure to the coronavirus.”
A different version of BPT cut was proposed by Sen. James Moylan in early March. Bill 311-35 proposed to temporarily reduce BPT from 5 percent to 4 percent between April 1, 2020 and Sept. 30 to mitigate the impact of the Covid-19 outbreak.
BPT was raised from 4 percent to 5 percent in 2018 as part of the Calvo administration's strategy to to make up for the $67 million drop in tax revenue as a result of President Trump’s federal tax reform.
Moylan first proposed the BPT rollback during the 35t Guam Legislature's inauguration in January 2019, but his bill was defeated in the legislature.
Gov. Lou Leon Guerrero previously said she preferred to keep 5 percent BPT "forever," saying it had enabled GovGuam to successfully float its latest bonds as the credit markets saw the BPT as a “stabilizer.”