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San Agustin proposes bill to improve excise tax collection

Updated: Feb 17, 2023

By Pacific Island Times News Staff

Sen. Joe S. San Agustin has introduced Bill 47-37, which aims to improve collections of excise taxes on alcohol and tobacco.

Numerous attempts to implement the cigarette stamp tax law since 2017 have failed due to a lack of funding, procurement matters, corruption, a lawsuit, and other issues. Repealing the law will take the tobacco stamp problem off the table.

“Wholesalers should pay tobacco taxes when products are released by Customs and Quarantine, and any products for export or consignment are a ‘drawback’ - where the burden of proof is upon the taxpayer,” San Agustin said.

“This will capture lost excise taxes that would have otherwise gone underreported. Public Auditor BJ Cruz estimated as much as $10 million to $15 million in uncollected taxes back when they did the audit. That is unacceptable. This bill will also relieve Rev and Tax of the duty to monitor bonded warehouses because they just don't have the manpower or resources to spare.”

An Office of Public Accountability report, issued in November 2019, sounded an alarm on the opportunity for tax evasion and underreporting.

The OPA said DRT had not established rules, regulations, or formal policies to certify or monitor bonded warehouses, nor does the agency have the personnel or training to ensure accountability.

The agency has relied upon voluntary compliance of wholesalers for over 60 years, with no “identifiable benefit to GovGuam.”

In a 2018 audit, OPA said 99 percent of tobacco taxes were not collected immediately because the law allows importers to delay tax payments on tobacco products it stores in private warehouses, the OPA said,

OPA’s analysis of the Department of Revenue and Taxation’s data on tobacco tax paid compared with the calculations for tax due indicated an underpayment of $142,000 by one taxpayer and overpayments ranging from $2,000 to $46,000 by three taxpayers.

OPA said auditors attempted to obtain data on the quantity of tobacco products imported to Guam via the tobacco manufacturers/distributors conducting business with Guam-licensed tobacco wholesalers.

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