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Senators continue to debate tax proposals

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After weeks of special sessions, senators are still debating proposals to raise taxes to address an ongoing cash crisis. The Governor has warned of payless paydays, and mandatory furloughs if they don't make up for a $67 million revenue shortfall created by federal tax reforms. The latest compromise, which passed late Tuesday, would raise the business privilege tax from 4% to 5% until the end of the fiscal year on September 30.  Then, it would transition to a 2% general sales tax on October 1.

Earlier in the day, lawmakers engaged in a lengthy debate on yet another proposal.

Dominating most of the early discussion was an amendment by Senator Michael San Nicolas to replace Senator Joe S. San Agustin's 2% general sales tax bill, with a 6% sales tax on non-residents. San Nicolas says basically the choice is this: "We can either make our people pay $39 a month, or have our visitors pay $25 when they come to Guam."

He argues that tourists are used to paying a sales tax in their home countries, but more than that, he says thousands of local residents can't afford a tax increase.  However, several members spoke out against the San Nicolas amendment out of concern for its impact on Guam's top economic driver.

Senator Mary Torres said, "A sales tax of 6%, I fear, will have, as testified by industry representatives, will have an adverse affect on tourism in Guam."

Opponents of the amendment also warned of the negative impact on military personnel who don't declare local residency. Senator Fernando Esteves derided the amendment as discriminatory taxation.

The San Nicolas proposal was ultimately voted down.

The proposal drew immediate concern from the DFS Group. In a letter, the longtime tourism retailer points out that the island's duty-free status has been central to its marketing for decades. It cautioned lawmakers about causing irreparable harm to the Guam Brand and the tourism industry as a whole.

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