B&B tax uncollected: GovGuam loses tax on $23M

January 22, 2019

 

The government of Guam anticipated to net taxes on approximately $23 million a year earned by bed and breakfast operators, yet it hasn't collected from these businesses which have operated under the radar for many years.

 

In 2016, the 33rd Legislature enacted a law requiring licenses and levying a 4-percent excise tax on B&B operators. The law was prompted by the hotel association’s disclosure that the shadow industry had been undercutting legitimate budget hotels on Guam. At that rate, GovGuam has lost $920,000 in annual revenue.

 

The government estimated around 100 B&Bs operating on Guam. While GovGuam scrounged for new revenues to fill the gap created by the federal tax cuts last year,  this segment of the vacation rental market remained untaxed.

 

 “If we put rules and regulations in place to run a business and require them to pay taxes, let us focus on those evading the law before we even think about raising taxes for those who want to positively contribute to our island,” said Speaker Tina Muna Barnes, author of Public Law 33-165.  “Part of the dialogue that will take place in March will include enforcing fines before raising fees.”

 

Muna Barnes said she was “alarmed” when she found out that a revenue- making initiative was not enforced by the previous administration.

 

In January last year, former Revenue and Tax John Camacho told senators that no B&B certificates had been issued yet because his department was still working on rules and regulations for short-tern vacation rental operations.

 

“Within the first 100 days, Muna Barnes committed to hosting a meeting with all stakeholders impacted by short-term rentals,” a press release from the speaker’s office said. “The speaker has directed her staff to continue research on this topic and they will be presenting along with DRT officials at the meeting slated for early March.”

 

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