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Governor credits territory’s revenue strength to surge in tax collections

Gov. Lemanu P.S. Mauga
fili@samoanews.com

Pago Pago, AMERICAN SAMOA — Of the total projected government local revenues of $143 million, an estimated $103.2 million will come from taxes, according to data provided by Gov. Lemanu P.S. Mauga in his 26-page Executive Budget summary booklet for the proposed FY 2024 budget submitted to the Fono.

Data in the budget summary shows total projected local revenues for fiscal year 2024 estimated at $143 million “is higher than last year levels” of more than $77.50 million.

And the $77.50 million includes the $7.40 million in revenue that funded the FY 2023 supplemental budget, according to data in the Executive Budget summary.

In his letter, the governor explained that the “strength in revenue sources is credited to the surge in taxes in the areas of corporate, individual, and excise tax collection.” He explained that forecasted revenues are predicated on the implementation of planned expenditures outlined in the budget plan.

Lemanu informed the Fono that of the total $143 million budget for local revenues: 65.8% is allocated to personnel, 19.0% to contractual services, 11.0% to others, 2.3% to materials and supplies, and the remaining 1.8% to travel and equipment.

TAXES

Taxes is the highest source of revenue for ASG and of the total $103.20 in projected tax revenue, individual income taxes is estimated to be the highest in FY 2024 — projected to collect $42.50 million compared to $29.40 million in FY 2023, according to ASG data.

Corporate tax shows a projected $30.5 million compared to the last year year’s $18.50 million; Excise Taxes – General at $26 million compared to $24.60 million in FY 2023; Soda Tax at $2.5 million while projection in FY 2023 was $3 million; and cover-over military tax projected at $1.7 million compared to $2 million in FY 2023. 

According to the governor, the market uncertainties, geopolitical risks, and persistent high inflation still remain; although, some believe prices have leveled off as they start to ease a bit and are trending downward in areas such as electricity, fuel, and in some food items.

He pointed out that the post pandemic recovery continues to provide positive traction through injected federal aid that boosted the economy.

“The significant increase in tax revenue compared to the previous year [FY 2023] is mostly attributed to the surge in corporate, excise, and individual tax collections,” Lemanu explained.

Additionally, the corporate tax revenue component increases are attributable to more corporations taking on more projects to meet market demand. And these are great times for businesses especially in building and construction, trade & import of goods, and retail sectors.

“As corporations rake in more sales and revenues, audits must be performed to ensure proper compliance with tax filing and payment,” he said.

For excise taxes, the governor explained that collections continue to provide stability to the local revenue base and is expected to increase due to growing demand for imported goods.

“Improvements in supply chains and prices deflation will most likely improve economic growth and further sustain stability in our revenue streams,” he said.

He also said that revenue trends from the individual tax payments is expected to increase from the previous year as more people with income file to pay their fair share and to get credit for the federally funded child tax credit.

“This is also a positive sign of job growth and income creation. There is also the potential of increase in individual tax payments by decreasing the number of tax non-filers,” he said.

The governor declared that: “Overall, our tax revenue division continues to provide the major catalyst that drive our total revenues and further sustain our economy.”

He noted that the ASG Treasury Department must be recognized for their commitment to collection efforts necessary to ensure corporations and taxpayers file and pay their taxes.

LICENSES AND PERMITS

Another revenue source for ASG and projects has not changed much in the past four years. For FY 2024, it’s projected to collect $1.6 million — the same in FY 2023.

Lemanu tells the Fono that revenue collections for licenses and permits are expected to be at same levels as the previous year generally as businesses obtaining licenses and permits continue to work on post pandemic projects funded by COVID programs.

On going projects in home repairs and construction are consistently visible within the community, and it provides jobs for local residents, he said.

FEES AND FINES

Under, Fees and Fines, the governor said these revenues are expected to be slightly higher than last fiscal year — $6 million projected in FY 2024 compared to $5.5 million in FY 2023. He said this revenue stream is projected to match demand as individuals are processed through immigration with easing of post COVID restrictions.

“Despite the increase in the cost of living, border control at normal pre-pandemic levels and movement of people and trade will continue and sustain our collection while improving our economy,” he said. “The proper enforcement of local regulations and policies is needed to help sustain current levels.”

CHARGES FOR SERVICES

According to the governor, the “Charges for Services” revenue stream is forecasted to be lower — at $6.9 million in FY 2024 — compared to the previous year 2023 of $8.3 million. This revenue source includes charges imposed at the Port of Pago Pago; as well as ASG rents and leases.

“Although it’s expected to be down, activities regarding cargo vessels will remain steady and increasingly improving to pre covid levels as restrictions and supply chain gridlock eases,” he explained. “Also, a recent gridlock in supply chains at the west coast ports that caused chaos has been resolved.”

“To yield good result, effective and efficient collection and payment methods must be performed, and better management of government rent and leases must be continually pursued,” he said.

OTHER REVENUE SOURCES:

•        Miscellaneous Revenues: are forecasted at $2.27 million for the new fiscal year, which is higher than FY 2023 at $1.9 million and the “increase is mostly due to the other category in program income,” the governor said. “The Interest and Judgement portion is expected to be the same.”

•        Indirect Cost Revenues: are anticipated to trend at similar levels as last year relative to grant funded payroll for FY2024 — projected at $7 million.

In addition, the Treasury will pursue all avenues available to ensure what is due to ASG is being collected.

•        Transfers-In Revenues — not much change for FY 2024, with revenue projection at $16.02 million compared to $16.07 million in FY 2023. Lemanu said the anticipated U.S Department of Interior grant in aid is expected to be a steady revenue component similar to last year. In addition, the special grant and school repairs are expected to sustain current levels.

Samoa News will report in future edition on other issues in the governor’s letter.