Sales tax once again being considered to boost government revenue

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ASG Treasurer Uelinitone Tonumaipea says the Treasury Department has the electronic equipment to monitor and track revenue earned through a sales tax, which is being considered by the Lolo Administration.

Discussion of a sales tax for American Samoa surfaced during Tonumaipea’s recent Senate confirmation, when Sen. Misaalefua J. Hudson asked him whether the government is looking at a sales tax to help boost revenues.

Tonumaipea said the government is looking at plans to restart the sales tax with a proposal currently being drafted. Tonumaipea believes a sales tax, which everyone would pay, is better than the wage tax that is paid only by workers. (The 2% wage tax goes directly to the LBJ Medical Center, according to local law.)

Samoa News notes that the first sales tax was implemented during the Lutali Administration many years ago but was later repealed when a new administration took the helm of government.

One of the biggest problems at the time was the collection of the sales tax from local businesses and there were some complaints that not all of the businesses were submitting the sales tax to the government.

This was the same concern over the past 10 years whenever sales tax legislation was introduced in the Fono — but never made it out of the committee and therefore was automatically rejected.

Sen. Tuiagamoa Tavai asked Tonumaipea how the government plans to record the collection of revenue from a sales tax and keep records so that vendors are paying it to ASG.  Tuiagamoa was also concerned with businesses, especially small operations, with the long wait in submitting to ASG the sales tax payment.

Tonumaipea explained that the Treasury Department has conducted research and there are machines that can be placed in stores to monitor the sales tax where every time the cashier rings up the tax, it’s recorded in the electronic equipment, and Treasury then electronically receives the information.

BACKGROUND

During his recent Senate confirmation hearing, Attorney General Eleasalo Ale said that business people and visitors coming from Samoa on a three-day or 48 hour permit, which would not have a fee, to shop and make purchases would further contribute to the local economy by paying a sales tax — if one is implemented.

In the first four years of the Lolo Administration, a sales tax was also mentioned and there was a discussion that proposed legislation was submitted two years ago. Instead it was House Speaker Savali Talavou Ale who sponsored the 7% sales tax bill introduced in late 2015.

However, the bill was never reported out of the committee and was actually defeated when the 34th Legislature officially ended last September. There were some lawmakers who were supporters of the bill, as long as the government has in place the resources and policies for collecting the sales tax, which they say is a much fairer than the wage tax.

When a House bill last year was introduced to impose a 5% excise tax on each imported bottle of water, the local Chamber of Commerce voiced strong opposition for targeting a specific sector of the business community to increase ASG revenue.

The Chamber said, “A more fair approach to increase government revenue would be an across the board sales tax that each and every person can have an equal share in.”

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