There is an online petition circulating which opposes the new 7% sales tax, and this follows a move by House Speaker Savali Talavou Ale who sponsored a bill to implement a sales tax in the territory. The newly proposed tax, if enacted into law, will then repeal the 2% “wage tax” that was established to help LBJ Medical Center, and is currently being paid only by wage earners in the territory.

The measure, which is assigned to the House Ways and Means Committee for review, says the sales tax would not apply to goods and services such as prescription drugs and medical services, according to the language of the bill.

The online petition was launched last month by a group called “We the People” and so far, 215 people have signed the petition. According to the petition, it is due to the recent 5% tax on hotel accommodations, 900% hike on various business licenses, an existing 4.25% + 2% ASG wage tax, a 7.65% FICA and Medicare deduction, and the latest proposal by the legislature to impose a 7% sales tax.

The petition goes on to say that if the new tax is passed and approved, ”the lowest earners of American Samoa… will come to bear the brunt of it all.”

Further, it declares that the minimum wage remains stagnant, which means the lowest wage earners in the community continue to make $4.50- $5.00 an hour with the moratorium in place.

“The whirlwind of taxes and hikes in fees and costs in less than a year have gone too far. We've entrusted our representatives to speak for us and we deserve better transparency and inclusion in the decision making process” says the petition.

The group has called for everyone to take a stand together until a complete and thorough analysis is conducted that assesses all of the potential outcomes and impacts of various policy options — and that includes the input, education, and awareness of more members of the community. 

The group is seeking 1,000 signatures and then they will officially present the petition to Governor Lolo Matalasi Moliga and the Fono leaders. They are calling on the public to get their faipule’s attention that they are opposing “yet another aggressive tax that targets our poorest and neediest families who are already struggling to stay afloat amid the rising cost of living.”

The petition also notes that they understand the need for more revenue to the territory “however we want decisions and policies to be made responsibly and with the best interests of those impacted carefully taken into consideration. Hold your representatives accountable by letting them know we wish to be included in the discussions and decision making process of our legislature and government.”

The online petition can be found on change.org

SALES TAX BILL — BACKGROUND

The proposed sales tax bill says that, if signed into law, the sales tax would become effective Jan. 1, 2016, which is the same date the 2% “wage tax” is to be repealed.

The bill’s preamble says that as the territory moves towards a greater degree of fiscal autonomy in these difficult financial times, it is important to seek fair and equitable ways of funding the cost of government and the cost of funding infrastructure projects that are “critical to our well-being”.

It points out that there are only five states and one U.S. territory that do not have a sales tax on some or all retail sales as a means of generating a secure revenue stream to help fund a part of the costs of state or territorial operations.

The preamble goes on to say that 38 states allow county and municipal governments to levy additional taxes. In the 38 states that levy a sales tax and authorize an additional sales tax at local levels, the total sales tax ranges from a low of 4.35% to a high of 9.45%. 

The bill also provides an explanation of tangible personal property, services rendered, retailer, sales prices and gross receipts. Additionally, the measure outlines the role of the retailers in the collection of the sales tax, submission of the tax to the ASG Treasury Department and penalties for violation of the proposed law.

Other goods and services exempted from the sales tax include: Prescription drugs dispensed by a doctor or medical services and related fees; Fresh food — grown, caught and sold by the original and local producers; Occasional sales — this includes a sale of property not held or used by a seller in the course of activities for which he is required to hold a business license; Nonprofit organizations — groups organized and operated for charitable, religious or educational purposes, or which hold a tax-exempt status as a 501(c)(3) organization under the Internal Revenue Code; Tuition — the cost of tuition and fees to attend an educational institution, whether public or private; Local transportation fees — such as fees associated with using buses and taxis; and, Petroleum products — these products are already subject to excise tax under local law.