Guam businesses nix GRT raise, wage hike, health insurance fee

July 15, 2017

 

 

The local business community is not convinced the government of Guam had explored all possible options to warrant yet another borrowing on the bond market.

 

   The Guam Chamber of Commerce thus flashed a thumbs-down on Gov. Eddie Calvo’s proposal to float a $125-million as a funding source for the Guam Memorial Hospital’s capital improvement projects.

 

   The Chamber’s  survey of its members indicated 86.6 percent are not in favor of Calvo’s bid to raise the gross receipt tax — from 4 to 4.75 percent— to cover the debt service for the GMH bond proposed under Bill 141-34.

 

   When asked their opinion on the best remedy to improve the quality of care and services for GMH, 60.6 percent suggested reducing the size of the government; 58.4 percent are in favor of privatizing specific areas of the hospital and streamlining operations; and 31.4 percent suggested GMH seek alternate funding sources and only 8.9 percent support the governor’s new bond proposal.

 

   About 91 percent of the respondents replied “no” when asked if GovGuam “had done all it could” to justify another bond borrowing.

 

  The Chamber also opposes two other proposals recently filed at the legislature: the health insurance premium fee and minimum wage hike.

 

   Polls showed 84.4 percent are not in favor of Sen. Dennis Rodriguez’s Bill 132-34, which proposes the creation of a 4 percent health insurance premium fee. Those who approved the proposal set a qualifying condition: "as long as the government doesn't raise the minimum wage."

 

  Chamber members were asked to identify which tax, if any, they would agree to raise. An even tie between property tax and not agreeing with any tax increase came out as top responses at 36.6 percent, a close comparison between hotel occupancy tax and increasing business privilege tax were at 15.5 percent  and 14.4 percent respectively while increasing the liquid fuel tax was chosen by 13.3 percent of the respondents. Other ideas proposed included revamping the GRT and transferring to a sales tax and imposing a fee for all online purchases.

 

 

   Consistent with their position in the past, member of the business community are opposed to the latest proposal to raise Guam’s $8.25 hourly minimum wage.

   Sen. James V. Espaldon has introduced legislation that calls for a gradual increase to the island’s minimum wage. Bill 135-34  seeks to increase the minimum wage to $8.75 per hour effective Jan. 1, 2018; and then again to $9.20 per hour effective January 1, 2019.

 

   “Several reasons were stated as to how businesses would be affected if a new wage increase were to pass. Many commented that there will be more stringent hiring practices to consider only those applicants with experience and education, others will eliminate entry level positions altogether,” the Chamber said in a press release.

 

   “62.5 percent replied they would need to raise the cost of goods and services and 45.3 percent said they would have to limit giving raises to employees while 35.9 percent  stated they would have to re-configure their staffing pattern and resort to reducing work hours for employees.”

 

   An independent minimum wage study released by the Department of Labor in February indicated that the dollar-per hour minimum wage increase in 2015 did not have a negative impact on Guam’s economy. “Employment rates show continued job and wage growth,” states a wage study report prepared by the Market Research Development for the Guam Department of Labor.

 

   The Chamber, however, said “a significant majority of businesses surveyed in a recent poll were not in agreement” with the report.

                                    Read related stories:

                                     Debunking the minimum wage boogeyman

                             Guam Senator Espaldon introduces new minimum wage legislation

 

 

  “The Guam Chamber of Commerce, the Guam Hotel and Restaurant Association, and the Guam Contractors Association jointly surveyed their collective memberships and results showed that 94.4 percent of those who participated in the survey were not interviewed for the official independent minimum wage study.”


   The chamber said businesses reported that the increase “did in fact have a negative impact on their respective companies.”

 

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