Guam senators discuss tax implications amid declining tourism and military income

The Guam Legislature held a public hearing on July 7, 2025, led by Senator Christopher M. Duenas, focusing on the economic challenges facing local businesses and the implications of tax policies amid a downturn in tourism. The meeting addressed the competitive disadvantages local businesses face due to tax exemptions for certain entities, which are perceived to create an unfair market environment.

Senator Duenas opened the discussion by highlighting the significant loss of tax revenue resulting from these exemptions, estimating millions in potential income that could benefit the local economy. He pointed out that the tourism sector, once a robust source of taxable income, has seen a decline, exacerbated by the loss of compact impact funding. The senator noted that while tourism generated approximately $190 million in taxable income, the actual tax revenue from this sector has dwindled to around $45 million, leaving a substantial gap that the government must address.

The senator proposed a reevaluation of tax policies, particularly regarding the General Retail Tax (GRT). He suggested that businesses not incorporated or domiciled in Guam should be required to pay the full 5% GRT, while local businesses could benefit from a reduced rate. This approach aims to ensure that all entities contribute fairly to the local economy, especially during challenging times.

Tom Shimizu, another speaker at the hearing, echoed Duenas' concerns and emphasized the need for better revenue collection practices. He pointed out that many taxable transactions related to the military buildup and online sales are not being adequately captured. Shimizu urged the government to enhance funding for the Department of Revenue and Taxation to improve collection efforts and ensure compliance from off-island vendors.

Joel Shaban, representing a long-standing retail business in Guam, shared his personal experience of the economic downturn. He reported a drastic reduction in staff and store locations, underscoring the impact of declining tourism on local businesses. Shaban's testimony illustrated the broader struggles faced by the retail sector, which has been significantly affected by the current economic climate.

The hearing concluded with a call for actionable solutions to address the disparities in tax collection and support local businesses. The discussions highlighted the urgent need for a balanced approach to taxation that considers the unique challenges faced by the local economy, particularly in light of the ongoing recovery from the tourism downturn. The legislature plans to continue exploring these issues in future sessions, aiming to implement measures that will foster a more equitable business environment in Guam.