Guam gets pre-election tax bonus

By David North

GUAM is doing so well financially that its Governor and Legislature have pushed through a pre-election rebate to its tax payers: each unmarried taxpayer will get a one-off rebate of $1000; married couples will receive $2OOO.

Further, all government employees will get a recurring wage increase of $5440 per year.

And, if that is not sufficient, there will be a tax-supported reduction of every one’s electricity bill, and a handsome increase in the pensions paid to retired Guam Government workers.

The rebate checks are scheduled to arrive on the Ist of this month, a month before Governor Joseph Ada, a Republi can, and the Democratic-controlled Ter ritorial Legislature face the voters on election day. Some taxpayers will receive more in rebates than they had paid in taxes.

It’s not clear that the treasury has enough money to cover all this proposed generosity. The 1989 fiscal year closed with a solid $3O million surplus, but the one-off tax rebate would cost $6O million and the annual inccrease in salaries would cost another $67 million every year. (The combined costs of he utility giveaway and the enhanced pensions will be an other $2O million or so.) Ada estimated (presumably without any of these moves) that the territory’s budget will show a surplus of more than $lOO million at end

of the 1991 fiscal year.

Ada made a point of comparing Guam’s current prosperity with the situ ation when he took office four years earlier; there was, he said, a deficit ofsl 70 million at the time; United States Depart ment of Interior officials agree that there was a deficit, but suggest it was lower than Ada’s claim.

The notion of a flat, across-the-board rebate, other than a percentage rebate,

was suggested by Ada because he said he was concerned that a percentage system would favour the wealthy. Further, though he did not make this point, the rebate might produce the secondary benefit of encouraging people to file income tax returns in the future; those who failed to file will not be on the list for the proposed rebate.

The suggested flat rebate was used in Alaska a few years back when it had more oil revenues than it could use; the source of the bonanza in Guam is largely tourism.

A secondary complication arising from the multiple giveaways will fall on Guam’s Congressmen, Ben Blaz; it will make it harder for him to squeeze money out of the national budget for such purposes as a more generous welfare programme for Guam’s elderly and the disabled (or for coping with Guam’s fast growing population of black tree snakes); there is no money in the Mainland budget for tax rebates.

American Samoa, in contrast to Guam has relatively few tourists, and a terrific budget crunch. (For example, a large proportion of its government workers earn less than the US$2.6l an hour raise just voted for government workers in Guam). Governor Peter Tali Coleman had to reduce the workweek for govern ment employees for a while earlier this year, and is pressing for a new tax system to help bridge an US$B million dollar deficit. And there are no precedents for territory-to-territory transfers of funds. □