Tax Relief

The governor needs to be open to tax breaks to ease financial struggles | editorial

As we enter the third year of the COVID-19 pandemic, businesses and families continue to struggle to make ends meet.

Not only do we have additional costs imposed by public health mandates and our own preferences for safety, but inevitable slowdowns in a tourism industry’s recovery mean for many out there that we’re still making less money than we used to – less money when we needed 2019 to survive and thrive.

This means families still can’t support as many local businesses as they have in the past. This means that employers still cannot afford to bring their entire workforce back to full employment.

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After nearly three years of this struggle, we can now predict the impact of this economic stress. Workers are laid off when companies close for good. People are turning to drugs and crime. Children no longer come to school. Those who are already struggling to keep their heads above water are being robbed or worse.

As part of plans to restore the island’s economy, Gov. Lou Leon Guerrero and her administration have offered a number of programs, mostly federally funded, that have provided financial assistance to residents and the private sector, ranging from direct grants to rent and utility relief.

Longer-term strategies, such as vocational training to launch new careers and attracting new industries not dependent on tourism, were a welcome sight and offer hope that Guam can be rebuilt to be more economically resilient to a global health crisis being.

But more needs to be done.

The governor herself recently confirmed this in a joint letter she wrote with seven other governors to President Joe Biden, asking the White House to approve more visas for foreign workers.

“We recognize that there are many causes of labor shortages, including some that are beyond our control. However, this fact only underscores the importance of political solutions that we can control,” the governors wrote.

Leon Guerrero has used her executive power to spend billions of dollars on congressional bailouts as she sees fit — and has certainly worked to protect local financial management from a pandemic crisis. To her credit, she’s also funneled money into small businesses, expanding affordable or free childcare, and helping to lure visitors back to Guam.

“We want to make it clear that we are making this demand even as we do everything in our power to create a business environment conducive to economic growth. We are investing in programs to reskill our workforce for the jobs that are currently in demand, we are considering various changes to our tax laws that could make the job more attractive, we support affected companies and are doing everything we can to reduce barriers to workforce participation it in the letter from the governors.

Given her tough stance on reducing the tax on local business privileges, Leon Guerrero’s openness to changes in our tax rates seemed a sign of policy change.

However, it was disappointing to learn that although Leon Guerrero signed this joint opinion with her name, no tax breaks were coming – at least not from Adelup.

Krystal Paco-San Agustin, the governor’s communications director, confirmed to the Guam Daily Post that the joint letter does not necessarily reflect Leon Guerrero’s positions.

“It was a collective letter. This issue is not specific to Guam,” said Paco-San Agustin when asked what changes to Guam’s tax code the governor is considering.

The U.S. Treasury Department’s final guideline for the disbursement of federal funds from the American Rescue Plan, a massive bailout available to the governor, allows for tax cuts or reforms so long as they do not “offset, directly or indirectly, any reduction in net tax revenue that results from a.” Changes in laws, regulations or official interpretations.”

That means the Guam government won’t risk a federal payback unless a tax cut causes the Treasury to lose money at the end of the year. Given how the governor has managed congressional pandemic assistance so far, and collections in the last fiscal year have surpassed pre-pandemic receipts, there must be a way to afford tax breaks.

We’re asking the governor to consider the best mechanism for doing this, whether it’s a universal tax credit, a temporary reduction in certain taxes, or conditional rebates that stimulate local commerce. Because legislation is ultimately needed, we also urge senators to work together to propose a responsible aid program that can withstand a potential governor’s veto.

Until we all recover from an ongoing, crippling COVID-19 cash crisis, it’s worth relaxing and waiving government financial obligations.

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