ASG Treasurer Uelinitone Tonumaipea doesn’t believe that American Samoa’s tourism industry will be affected by the government’s proposed 5% hotel room tax, which he says is estimated to collect about $200,000 annually, based only on a survey of the two major hotels in the territory.

However, Sen. Galeai M. Tuufuli suggested the government look at a sales tax, which is paid by everyone— locals and visitors alike—instead of ASG imposing several taxes that will only give residents pains and headaches.

Tonumaipea appeared yesterday morning before the Senate Budget and Appropriations Committee, chaired by Sen. Laolagi F.S. Vaeao on the government’s 5% room occupancy tax, which covers hotels, motels and similar accommodations for visitors, but is not meant for long term tenants.

The ASG Treasurer explained that 75% of the room tax would go to the Department of Port Administration for the Airport Division, whose budget comes up $1.5 million in the red each year, and the general fund ends up covering Port's excess spending.

According to the Treasurer, the governor is looking at other revenue sources to help the airport, and ASG has identified the room tax as a source, since American Samoa does not have one. Many off island jurisdictions impose high room taxes, he said, adding that 25% of the room tax revenue would remain in the general fund.

Based on a recent survey conducted by the government, Tonumaipea said that ASG estimated they could collect $200,000 annually from the proposed room tax and this is based only on the two major hotels — Tradewinds and Sadie’s.

However, if motels and smaller accommodations are included, the amount collected annually would be higher than $200,000, he said.

Galeai pointed out that the local tourism industry is not strong and it's going through development. He asked whether such a tax will impact the Territory’s efforts to attract more tourists to its shores.

Tonumaipea responded that many of the visitors to the territory are here on business and these individuals are surprised to learn that American Samoa doesn't have a room tax; therefore they are happy to come here. He also said that the room tax is high in Samoa, where there is a big tourism industry.

Galeai asked if the government is looking at imposing other taxes to raise revenues, adding that he recently read in the newspaper the governor’s statement on the current financial situation faced by ASG.

Tonumaipea said the governor has other money bills to be presented soon to the Fono such as hikes in fees and fines, a sales tax and a compliance tax — which is being worked on by the Attorney General’s Office.

“Levying a hotel tax and then a sales tax is overlapping in taxing our people as well as visitors,” Galeai told the witness. “It's best that we do a sales tax across the board for everyone. There are a lot of people from Samoa coming here to shop because we don’t have a sales tax.”

Galeai believes more revenue can be collected through a sales tax to provide funding for the government, instead of imposing different taxes that will "cause people headaches".

The senator stated, “Our people will not easily forget issues that cause them pain and suffering.”

Later on during the hearing, Sen. Soliai Tuipine Fuimaono asked, “isn’t our tourism industry going to be affected by this tax?” and Tonumaipe’a responded, saying in Samoan, “ailoga” meaning “I doubt it”.

But representatives of the local hotel and motel industry, who are opposed to the tax, say that this is an unfair tax, because it targets only them, but not others in the service industries such as restaurants and airlines — who all benefit from visitors or tourists to the territory. (See tomorrow’s edition for testimonies from the hotel and motel representatives or read it in Samoan language in today's Lali section.)

Samoa News should note that a room tax bill was tackled by the Fono in the late 1990s but it did not pass. Objections were made by the hotel/ motel industry as well as other lawmakers who were concerned that it would deter tourists from visiting American Samoa, which was working to develop the local tourist industry even then.

It should also be noted that a sales tax was implemented several years ago but was later discontinued after ASG faced problems collecting the money from local vendors.

BACKGROUND

In his official State of the Territory Address, Gov. Lolo Matalasi Moliga informed lawmakers that visitors’ numbers to American have declined nominally in 2014 compared to 2013.  In 2014, there were 5,099 visitors in American Samoa compared to 5,130 in 2013.

In 2012, 5,427 visitors were recorded to have visited the territory.

Estimated revenue generation attributed to visitors entering American Samoa averaged $2.3 million annually for the last three years. (2013: $2,294,550; 2012: $2,308,500; and 2011: $2,361,150).

Lolo who promised his administration would move to boost our tourism industry, said ASG is aggressively inviting conferences to be held in American Samoa to increase tourism-generated revenue. Moreover, travel packages have been offered by local hotels and motels and advertised in travel magazines.