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Bill to plug revenue leaks at Guam Customs awaiting governor's signature

By Pacific Island Times News Staff

A landmark piece of legislation to transform and modernize the operations of the Guam Customs and Quarantine Agency is headed to the governor’s desk, after the 37th Guam Legislature unanimously passed Bill 176-3.

The bipartisan bill, authored by Vice Speaker Tina Rose Muña Barnes, would authorize the agency to convert its inventory and monitoring processes with the Harmonized Commodity and Coding System.

Tina Muna Barnes

The proposed new system is estimated to generate more than $50 million in additional revenue without raising taxes.

“For years - basically decades - the need to modernize and digitize the system used by our customs officers has grown. Countless civil servants have made sure this effort wasn’t abandoned, and it’s thanks to them we have come to this important milestone today,” Muña Barnes said.

“I’m grateful to help push this initiative over the finish line. Thank you to my colleagues for their support, and our local stakeholders for their good-faith engagement," she added.

The vice speaker called on Gov. Lou Leon Guerrero to sign the bill into law, "so we can truly get the ball rolling on a rare opportunity" to invest more money into critical services without burdening families with higher taxes.

The Harmonized Commodity and Coding System is a widely used global standard maintained by the World Customs Organization.

The current system has serious limitations and gaps, contributing to tens of millions in lost tax revenue.

According to a report published by the Office of Public Accountability, in 2018, while air cargo that came into Guam was valued at $1.6 billion, only about $136,000 in use taxes were collected. Proper taxation of the air cargo that year could have generated $65.5 million in Use Tax revenue, the OPA reported.

Bill 176-37 authorizes the director of CQA to promulgate rules and regulations to introduce the Customs Harmonized Commodity and Coding System, a Customs Automated System, and other provisions to implement the systems.

“Bill 176 is a critical and long overdue legislation, and is an essential component to modernize customs import and export processes, automate operations, improve the assessment and collection of the use tax, create uniformity and transparency, facilitate movement of goods and improve CQA’s risk and threat capabilities to interdict high regulate goods and illicit contraband,” said Ike Peredo, director of CQA.

“When signed into law CQA will begin the process of developing rules and regulations through the AAA process, followed by public outreach, training and tracing and beta testing before full implementation," he added.

The legislation also:

  • Allows Guam CQA to deny entry or re-export cargo and goods incorrectly declared under the new system

  • Prescribes tiered based fines based on the cumulative numbers of offenses

  • Considers separate actions for consumers who rely on third parties to import goods

  • Deposits fines into a revolving fund for Guam CQA

  • Ensures the newly adopted harmonized coding classification schedule is available to stakeholders free of charge.

The bill is co-sponsored by Sens. Chris Dueñas, Jesse Anderson Lujan, and Dwayne T.D. San Nicolas.

“If enacted into law, the Government of Guam will be able to classify and quantify all commodities going in and out of Guam using a coding system,"

said Matthew Santos, deputy director of the Bureau of Statistics and Plans.

"It will also create a mandate to have all commodities coming into Guam coded, which will allow the government to automate customs clearances, regulatory pre-clearances, taxes, and the collection of trade data from imports,” he added.


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