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Proposal to raise small‑business BPT exemption ceiling draws mixed reaction in committee
Summary
Senator Vicente Borja's bill to raise the gross‑income threshold for limited BPT exemptions to reach more small businesses was supported by GEDA and opposed cautiously by budget analysts; DRT said it has pulled the data and will deliver a fiscal analysis soon.
The committee heard Bill 90‑38 April 24, a measure introduced by Senator Vicente A. V. Borja to amend the Dave Santos Act threshold and increase the gross annual income ceiling that qualifies for a reduced business privilege tax for qualifying small businesses.
"The intent of this bill is simple, to provide more breathing room for Guam small businesses," Borja said in opening remarks. The bill as presented would raise the threshold so more local businesses could qualify for limited exemptions and pay a reduced BPT on the qualifying portion of gross receipts.
Department of Revenue and Taxation Director Marie Lizama told the panel DRT has already pulled underlying data for calendar years 2023 and 2024 and identified roughly 663 taxpayers who fall above the current $500,000 threshold and would be affected by a change as drafted. Lizama said a full fiscal analysis requires detailed review of more than 300,000 gross‑receipts line items and the agency will return to the committee with numbers.
Tina Garcia, acting CEO of the Guam Economic Development Authority (GEDA), testified in favor and said raising the threshold would provide relief for local entrepreneurs and allow more businesses to invest and expand. "Small businesses are the backbone of our economy," Garcia told senators, urging careful design but expressing support for the policy goal.
Several senators said they want the bill to be conservative and asked for more precise fiscal estimates before advancing. Senator Gumatalto asked DRT to explain the current rates and how the limited exemption (LexB) and the Dave Santos tiers interact; DRT staff described a look‑back to prior year gross receipts to determine eligibility and said the effective rate for qualifying businesses can be 3 percent under the limited exemption.
Budget and finance witnesses noted the measure could reduce General Fund revenues and the pledged BPT coverage for bondholders is a central constraint. GEDA and DRT said they would continue to work with BBMR and the legislature on an accurate fiscal note; DRT expected to deliver a more detailed analysis in the next several days.
The hearing closed without action. Committee members asked for follow‑up reporting on the number of affected taxpayers and an estimate of the near‑term fiscal impact, with a follow‑up hearing or roundtable to review DRT’s detailed calculations before markup.
