Sen. Michael San Nicolas, D-Dededo, has filed a bill that would require contractors with over a million dollar projects to pay four percent of the amount as Business Privilege Tax (BPT) and plug any loopholes in the government’s tax collection scheme.
San Nicolas, through his spokesman, John Paul Manuel, conceded that running after delinquent taxpayers, especially off-islanders, “is difficult.” They are mostly not from the island but are licensed to do business in Guam,” he said, in a recent telephone interview.
Under San Nicolas’s proposal, Senate Bill 178-33, the BPT will be deposited into an escrow account, by a designated escrow agent.
Manuel cited several factors that have hindered the government’s revenue collection program.
Despite the training of some 30 revenue officers and collection agents under the federal government’s Internal Revenue Service (IRS), some $100-million are still due the government, according to Manuel.
“If someone moves out of the island, it’s hard to track him/her down. Then, if someone, for example, dies, and the property taxes are unpaid, it’s hard to go after the new owner,” Manuel explained.
Initially, the Revenue and Taxation office estimated that about $196 million remain “collectibles” for the government. “Then the collection agents, I believe, were able to collect one million dollar each,” Manuel said.
With the ongoing construction of the military bases, the government had said that it hopes to collect from the approximately $8-billion worth of contracts spread over in years.
Military contractors selected by the Department of Defense are licensed to engage in business in Guam, “but it does not mean that they are paying taxes,” San Nicolas said, in an earlier statement.
San Nicolas added that he wants to establish a system “similar to withholding for high contract amounts (that) will help improve the ease of BPT compliance for off-island military contractors who engage in large Guam-based projects.”
The senator warned that “without a significant improvement of collection capabilities, given the historic levels of (tax) receivables, the full potential revenue of the military build-up may not be realized.”
The bill is dubbed as the “Responsible Business Tax Escrow Act.”/The Junction News Team