Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Tax Policy topic
No spam. Unsubscribe anytime.
Senate restores 5% tax on large military contracts and funds Jones Act economic study
Summary
After extended debate over fairness and legal risk, senators restored a 5% business-privilege tax on military contracts above $10 million to capture revenue from the ongoing build-up, and separately approved funding for an economic-impact study on cabotage and the Jones Act.
In a lengthy floor debate that stretched late into the evening, senators restored a 5% business-privilege tax (BPT) on military contracts valued over $10 million. Senator Tydigwe urged colleagues to recover guaranteed revenue from the military build-up that he said would otherwise be lost, while opponents warned the targeted tax could be seen as discriminatory against federal contractors and argued it risks constitutional pre-emption and legal challenge.
Proponents framed the tax as a temporary measure to capture revenue during a concentrated period of federal construction that imposes costs on local infrastructure and services. Opponents including Senator Gumatata and Senator Luhan warned of federal supremacy issues and potential litigation, saying discriminatory tax treatment of federal contractors would be vulnerable in court. After motions, debate and multiple speakers for and against, the amendment passed.
Separately, the committee approved an amendment by Senator Luhan to fund an economic impact study on cabotage and the Jones Act, authorizing up to $400,000 and calling for GEDa to administer the study with University of Guam participation.
