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Introduced on APRIL 13, 2011.
AN ACT TO REPEAL AND AMEND CHAPTER 28, TITLE 11 OF THE GUAM CODE ANNOTATED RELATIVE TO “USE TAX LAW” EXEMPTIONS”.
On April 13, 2011, Sam introduced Bill 144 – an Act that amends existing Use Tax law, which applies to tangible personal property. As it stands, excluded from Use Tax are imports by “a contractor importing permanent equipment for the performance of a construction contract.”
This bill came about after Sam recognized the increase of heavy equipment being transported on the roadways, and wondered about the impacts and costs to Guam. Sam was surprised to learn that many costly equipment were not locally purchased or rented. It was a bigger surprise to learn that Use Tax exemptions were for such equipment, and given mainly to large (often off-island) contractors. Considering the need to improve the government’s economic condition and operations, Sam took decided to examine whether this Use Tax exemption was still feasible today. Sam recognized that this exemption was probably created when legislation was designed to provide incentives for local business development. However, current economic conditions are different. The pending military build-up and public infrastructure improvements have attracted a large contingency of contractors that import their construction-related equipment specifically for their economic gain. Importation of large amounts of equipment for construction usage hinders local businesses, such as distributors and rental companies, and significantly limits the economic benefit to Guam. Such importation bypasses local businesses and is not subject to local taxes, adding up to millions in lost revenue! Additionally, hauling and operation of heavy equipment have detrimental local impact, including damaged roads, increased emission into our air and potential fluid leaks into our soil and water — all of which amount to millions of dollars of damages, with resulting costs to the people of Guam! Thus, lost revenue for GovGuam and increased impact to the island means a significant loss to the people of Guam. Bill 144 will help correct this. Note that Bill 144 does not increase or create new tax, which was confirmed by the Department of Revenue and Taxation. It simply repeals a current tax exemption. The bill will help protect locally established businesses that may have to compete with large off-island competitors. Sam believes that “for the privilege of doing business in Guam, construction contractors will need to comply with the Use Tax for certain equipment imports related to work projects in Guam,” and “For the benefit of Guam, it is important to repeal current legislation that exempts construction contractor imports from Use Tax.” By encouraging contractors to support local businesses, we help create jobs for our people. This bill helps even the playing field, contributing to the sustainability of our local work force and stimulating local economy.
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