For Guam's business sector, BPT tops the list of deciding factors in November polls
By Mar-Vic Cagurangan
Candidates who tick off the Guam Chamber of Commerce’s five-point checklist — with the business privilege tax cut topping the lineup — will get the business vote.
Although the influential business group will not endorse candidates for the Nov. 8 elections, individual members’ votes will be guided by the five initiatives formulated by the Chamber’s Political Action Committee, according to Catherine Castro, Chamber president.
Besides the BPT rollback, the PAC initiatives also include support for the military buildup, transparency in government, austerity and a part-time legislature.
“PAC has sent out surveys to all candidates to see where they stand on these initiatives,” Castro said, adding that the survey results will be released in the first week of November.
“We just want the community to know how the candidates feel about these initiatives,” Castro said.
The BPT rollback has been a recurring theme of the Chamber’s crusade for business survival.
BPT was raised from 4 percent to 5 percent in 2018 as part of the Calvo administration's strategy to make up for the revenue loss resulting from President Trump's Tax Cuts and Jobs Act that dramatically cut taxes and eliminates certain tax breaks.
Persistent proposals in the legislature to roll back the BPT rate to the 2018 level have repeatedly fallen through.
Gov. Lou Leon Guerrero, who is seeking reelection, remains reluctant to cut the BPT.
“What we need to look at is the consequences. What does it mean for our island?” the Democratic Party's gubernatorial candidate said in an interview during a PAC podcast. “We started to see increased construction and increased federal contracts. These people pay 5 percent BPT.”
Rolling back the BPT, she said, would redound to an annual revenue loss of between $60 million and $100 million from military and federal contracts.
If the BPT were to be rolled back, Leon Guerrero said, “we need to discuss how we are going to replace those losses.”
The Republican Party’s gubernatorial candidate, former Gov. Felix Camacho pushes for a BPT rollback.
"The Camacho-Ada team is committed to rolling back the BPT from 5 percent to 4 percent,” the Republican team stated in its platform unveiled in July. “We recognize the pain and struggle of our business community most especially the small business market.”
“While I don’t tell anyone how to vote, from the standpoint of the Chamber, we need to elect leaders who are pro-business,” Ed Untalan, chairman of the Chamber’s board of directors, said during the Chamber meeting at Guam Hilton Resort and Spa on Wednesday. “We are experiencing challenges ahead and we need to keep our economy alive.”
Untalan, executive vice president and Guam-CNMI region manager at the First Hawaiian Bank, also said supporting the military buildup is imperative to sustain Guam’s fragile economy.
Bereft of a homegrown industry, the island’s economy has been fueled by tourism and the military.
Untalan recalled that Guam grappled with an economic meltdown in the 1990s following the implementation of the Bases Realignment and Closures that shrank the military presence on island.
The Covid-19 pandemic, which halted world travel, underscored the volatility of tourism. Guam had zero arrivals from its source markets. Tumon hotels were occupied by service members, who came to Guam for military exercises and sailors from USS Theodore Roosevelt.
“We have this new partner called the ‘military’ and we need to be able to take advantage of that,” Untalan said.
He said Guam’s economy would have been in worse shape had it not been for the Department of Defense’s investments in the past two years.
In the post-Covid economy, Guam struggles with inflation. “This is another thing that concerns me,” Untalan said.
According to the Bureau of Statistics and Plans’ third quarter report, Guam had an inflation rate of 7.3 percent in the second quarter of the year, going up from 6 percent during the same period last year.
“Looking at the areas where the prices increased: eggs grow 42 percent; seafood, 9.2 percent, and dairy products, 14 percent,” Untalan said. “It’s impacting everyone.”
He noted that inflation counterbalanced the minimum wage increase.
“When you give your staff a one to two percent increase in their salary, yet the inflation rate is 8.3 percent, you are at a loss,” Untalan. “It impacts your pocket.”
At the current rate, he said, inflation added a burden of between $5,000 and $7,000 a year for a family.
“That’s significant and we need to have leaders to be able to help us. It’s not an easy thing to cure,” Untalan said.