Chamber of Commerce membership opposed to raising GRT

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Guam – The majority of the Guam Chamber of Commerce membership is opposed to Governor Calvo’s proposal to borrow $125 million on the bond market and raise the business privilege tax or gross receipts tax from 4% to 4.75% percent for GMH. A majority are also opposed to Senator Dennis Rodriguez Jr.’s proposal to create a 4% health insurance premium fee.

According to a recent survey by the Guam Chamber of Commerce of its membership, 86.6% are against a proposed 19% tax hike to the GRT’s to fund GN|MH. 84.4% are opposed to Senator Dennis Rodriguez Jr.’s proposal to create a 4% health insurance premium fee.

Chamber members were also asked to pick a tax that they would agree to raise. Property tax was the top pick but only 36.6% agreed to raising this tax. 15.5% agreed to raising hotel occupancy taxes and 14.4% agreed to raising business privilege taxes. 13.3% agreed to raising the liquid fuel tax.

However, 91.1% said they did not believe that GovGuam had done all it could financially to warrant borrowing on the bond market to fund GMH capital improvement projects. 60.6% said reducing the size of GovGuam was the best remedy for improving GMH. 58.4% suggested privatizing specific areas of GMH and streamlining operations. 31.4% suggested seeking alternate funding sources. Only 8.9% agreed with floating a $125 million-dollar bond and increasing the GRT to 4.75%.

In addition, the Chamber says in a release that a recent survey of businesses conducted by the Guam Hotel and Restaurant Association the Guam Contractors Association and the Guam Chamber of Commerce shows that 69.4% disagree with an economic impact statement that says the 2015 minimum wage increase of $1.00 will have a positive impact on Guam. 94.4% of those who participated in this survey say they were not interviewed for the independent minimum wage study. As for the actual impacts, 69% said the minimum wage hike increased the cost of goods and services, 63% said it limited employee raises, 46% said they reduced work hours for employees and 34.6% said they implemented hiring freezes.

A majority surveyed also disagreed with two recent proposals to raise the minimum wage to $9.20 an hour by October 1st of 2017 and to $10.10 by October 1st, 2018. If the minimum wage increases were to go into effect, 62.5% said they would need to raise the cost of goods and services, 46.3% said they would need to limit giving raises and 35.9% said they would have to reduce work hours.

The Chamber also made other suggestions like revamping the GRT and transferring to a sales tax or imposing a fee for all online purchases.

READ FULL RELEASE BELOW:

Business community chimes in on recent fee increase proposals

HAGÅTNA – The Guam Chamber of Commerce polled its membership on issues regarding proposals to raise the Business Privilege Tax (BPT, also known as the GRT) and the minimum wage. Following are
results from both surveys.
Proposed increase in the Business Privilege Tax (Bill Nos. 141 & 142) & creation of a 4% health
insurance premium fee (Bill No. 132-34):
Earlier this month, the Chamber asked its members to provide feedback on Governor Calvo’s proposal to
raise the BPT from 4% to 4.75% (a 19% increase). Out of 90 respondents, 86.6% said they do not support
the Governor’s proposal.
The same survey asked members to respond to Senator Rodriguez’s proposal to create a health insurance
premium fee to assist those who are working and not insured. 84.4% are not in favor of this proposal. One
commented from those that approved the proposal said “as long as the government doesn’t raise the
minimum wage.”
Chamber members were asked to identify which tax, it any, they would agree to raise. An even tie
between Property Tax and not agreeing with any tax increase came out as top responses 36.6%, a close
comparison between Hotel Occupancy Tax and increasing Business Privilege Tax were at 15.5% and
14.4% respectively while increasing the Liquid Fuel Tax was voted on by 13.3% of the responders. Other
ideas proposed included revamping the GRT and transferring to a sales tax and imposing a fee for all
online purchases.
When asked if the Government of Guam had done all it could financially to warrant borrowing on the
bond market to pay for GMH capital improvement projects, 91.1% replied “no.”
When asked their opinion on the best remedy to improve the quality of care and services are for GMH,
60.6% suggested reducing the size of the Government of Guam overall followed closely by privatizing
specific areas of the hospital and streamlining operations at 58.4%. 31.4% suggested GMH seek alternate
funding sources and only 8.9% agreed with Governor Calvo’s proposal to float a $125 million bond and
increase the GRT to 4.75% to help pay for the necessary improvements at Guam Memorial Hospital.
All three bills were introduced this month and do not have a public hearing scheduled to date.
Proposal to raise the minimum wage:
A significant majority of businesses surveyed in a recent poll were not in agreement with the Economic
Impact Statement released in early February 2017, which assessed the impact of the 2015 minimum wage
increase of $1.00. The study revealed that the increase had a positive impact on Guam.
The Guam Hotel and Restaurant Association, the Guam Contractors Association and the Guam Chamber
of Commerce jointly surveyed their collective memberships and results showed that 94.4% of those who
participated in the survey were not interviewed for the official independent minimum wage study. Of
those surveyed 69.4% reported that they did not agree with the findings of the official Economic Impact
173 Aspinall Avenue, Suite 101, Ada Plaza Center, Hagåtña • P.O. Box 283, Hagåtña, Guam 96932 • http://www.GuamChamber.com.gu
Tel: 472-6311/8001 • Fax: 472-6202 • E-mail: info@GuamChamber.com.gu
Statement. Businesses reported that the increase did in fact have a negative impact on businesses. 69%
reported increasing costs of goods and services, 63% reported limiting employee raises, 46% reported
reducing work hours for employees and 34.6% reported that they implemented a hire freeze. Others
replaced jobs with advance technology, reduced health care benefits, contracted out work and eliminated
benefits overall, just to name the top measures implemented by local businesses with the 2015 minimum
wage increase.
Across the board, Guam businesses did not agree with the current proposal to raise the minimum wage
from its present $8.25 per hour to the proposed $9.20 per hour. If Bill No. 20-34 passes as written, this
wage increase would take effect on October 1, 2017. Subsequently, an increase to $10.10 per hour with
an effective date of October 1, 2018 was overwhelmingly disapproved by those surveyed.
Of those companies that responded to the survey 70.8% have been doing business on Guam for over 10
years. 59.7% employ 25 people and less. 40.2% employ over 25 employees.
In response to creating a separate wage amount for minors, the response was almost split with 52.1% who
did not agree and 46.4% that did agree there should be a separate wage for minors.
Several reasons were stated as to how businesses would be affected if a new wage increase were to pass.
Many commented that there will be more stringent hiring practices to consider only those applicants with
experience and education, others will eliminate entry level positions altogether. 62.5% replied they would
need to raise the cost of goods and services and 45.3% said they would have to limit giving raises to
employees while 35.9% stated they would have to re-configure their staffing pattern and resort to
reducing work hours for employees.
When asked how much consumer prices would increase as a result of the proposed wage increase, 23% of
those who responded replied that prices would increase approximately 10%. 9.6% replied that prices
could increase between 15 – 25%.
In response to reinstating the tip credit, 42.9% of responders were amenable to some form of tip credit
while 37% did not respond to the question nor did they indicate an amount to be given and 19% were not
in favor of a tip credit at all. 9.7% replied that the proposed increase would have no impact on their
business.
The business community is encouraged to participate in a public hearing scheduled on Wednesday, July
19, 2017 at the Guam Congress Building. Public Hearing times are 9:00 a.m., 2:00 p.m., and 6:00 p.m.

 

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