Following island military contractors with over $1 million contract shall be required to designate an escrow agent to ensure that the Business Privilege Tax (BPT) is paid to the Guam government.
This is the primary purpose of Sen. Michael F.Q. San Nicolas in filing Senate Bill 178-33. “At risk is the fact that just because a business is licensed in Guam does not mean that they are paying the taxes here,” he said in a press release.
Under the current law, military contractors are required to be licensed to do business in Guam. This is enforced by the Department of Defense when they select contractors to do work related to the military buildup, the senator explained.
BPT is the biggest single source of revenue to the general fund of Guam government. This is “responsible for roughly one-third of its revenue.” A 2008 audit by the Inspector General of the United States found an “inadequate enforcement of Guam’s taxes.” And this costs millions of dollars each year, the bill states.
San Nicolas pushes to improve tax collection by requiring contractors to assign an escrow agent, which is a financial institution, authorized to do business in the island and insured by either the Federal Deposit Insurance Corporation or the National Credit Union Administration.
With the required 4 percent of the contract, amounting to $8-billion military building, this could translate to as much as $320 million “for the people of Guam,” said San Nicolas.
The escrow agent shall deposit the amount to an escrow account and the remaining 96 percent of the disbursement to the payee. In this manner, the senator said “all BPT is captured and paid.”
Under the same bill, Guam’s licensed businesses in good standing with the contractors’ License Board, PEALS Board, Bank and Insurance Board or with a valid real estate license are exempt from the requirement.
San Nicolas said that with “millions of dollars on the line, we cannot afford to miss this opportunity to efficiently collect.”/The Junction News Team
