Senate committee recesses hearing on bill to cut Guam business-privilege tax after hours of split testimony

The Senate Committee on General Government Operations and Appropriations recessed its public hearing on Bridal 11, a proposal to reduce the Business Privilege Tax (BPT) headline rate from 5% to 4%, after several hours of testimony from business owners, industry representatives and policy analysts and with no formal vote taken.

Supporters of the rollback, including small-business owners and representatives of the business community, said the 1 percentage-point cut would be used to retain and recruit employees and to invest in businesses. “I am here to support the Chamber of Commerce,” Ronald Young said, identifying himself as representing the Chinese Chamber of Commerce. “One hundred percent of that 1% is going to go to giving our employees raises,” he added.

Opponents and independent analysts warned the rollback would reduce government revenue and could force cuts to public services. Julian Janssen, a resident testifying in his personal capacity, told senators that a 1% cut would translate to “approximately $82,000,000 in lost revenue to the government of Guam, about 6% of the government's budget.” He added that the reduction could shrink economic activity and put an estimated 1,100 full-time-equivalent jobs at risk, based on his calculation of aggregate output per worker.

Why this matters: The BPT is a major local revenue source used to fund public safety, education, health services and capital projects. Senators and witnesses debated whether the proposed tax cut would increase household purchasing power or primarily benefit larger firms and contractors, and whether lost revenue could be absorbed without reducing services.

Business testimony emphasized operational pressures since the pandemic, supply-chain disruptions, staffing shortages and rising costs. “My net income has gone down by about 30%, 40% since the pandemic,” said Dr. Robert Hildreth, a veterinarian and small-business owner. “I've had to cut back the number of staff that I employ,” he added, saying the rollback would help him invest in equipment and staff.

Several business witnesses said they would not pass savings directly to consumers. At one exchange, a testifier summarized responses: when asked whether the BPT increase had been passed to customers, a local business owner said, “It's built within the price,” and later confirmed any reduction would more likely be used for staff pay or to cover operating costs, not to roll back consumer prices.

Committee members pressed Rev and Tax and other agencies for more data on how many taxpayers would benefit, how the revenue impact breaks down by industry and what federal tax changes might mean for local receipts. Agency staff said they could provide industry breakdowns and threshold reports but did not have all of the requested analyses at the hearing.

The hearing also surfaced technical details about the tax code and exemptions. Witnesses and staff noted that many taxpayers do not pay 5% on gross receipts because exemptions and deductions reduce taxable amounts; Rev and Tax staff cited an existing program (referred to in testimony as the Lexbee threshold) that sets a 3% rate for certain income bands. Panelists also noted that roughly 1,751 businesses fall into the higher gross-receipts categories referenced during testimony, while about 2,948 active accounts reported zero income on filings, according to figures cited at the hearing.

No final action was taken. Chairman Duenas announced the committee would not adjourn the measure and said additional public hearings would be scheduled to allow more testimony and to gather more data from agencies. Early in the proceedings the committee chair signaled a plan to schedule an evening session; at the hearing’s close Duenas said he planned to reconvene a full public hearing starting at 1 p.m. and continue into the evening to accommodate private-sector schedules.

The record of testimony and additional agency data requested by senators will be used at the next hearing when the committee resumes consideration of Bridal 11.