PAGO PAGO, American Samoa — The American Samoa Chamber of Commerce Board of Directors believes that the government should reduce spending if there is a gap between revenues and approved budgets. The Chamber believes taxes and fees are already too high; increases will hurt families and make it even more difficult to promote economic growth.
To the extent there are deficits, we believe that health care should be given very high priority. This is especially true since the federal government provides one dollar of Medicaid funding for every local dollar spent to subsidize our hospital.
The American Samoa Government didn’t have enough money last year to fund the budget approved by the Fono, and government workers were placed on short hours for a few months to reduce spending and help close the deficit gap.
As we have recently learned, the hospital and the college were also shorted by millions of dollars.
In response to the gap between approved budgets and available revenue, the Administration would like to increase taxes and fees with the intent of transferring more money from the community to the government.
The Chamber of Commerce opposes those increases at this time.
High taxes and fees (including ASPA fees) are already a heavy burden on families. The loss of thousands of cannery jobs in 2009 has led to difficult economic times in American Samoa. Families and businesses and the government have all been affected. Savings have been tapped, spending has been reduced, plans have been changed.
Taxes and fees are already so high that prospective investors from off-island are discouraged from opening a business here. Income tax rates are higher here than the comparable federal tax rates, which make it ever more difficult to interest an investor already skeptical about the difficulty in obtaining a business license, or forming a corporation, or paying the high cost of gasoline and electricity, or obtaining a qualified workforce at competitive wages.
The Chamber of Commerce recommends that the government should improve its revenue projections so that the Fono does not approve an unrealistic budget that cannot be fully funded.
When there is a deficit, we believe that cutting spending is more appropriate than increasing revenues through increased taxes and fees.
The Chamber also recommends that when revenues fall short, the Fono should be involved in the decisions about how to scale back the budget so that the hard choices that need to be made reflect a wide range of community priorities.
The Chamber recommends that health care and education should be given very high priority when budgets are cut back. This is especially true since the federal government provides one dollar of Medicaid funding for every local dollar spent to subsidize our hospital. It is unfortunate that LBJ lost $2.8 million in federal grants last year when ASG failed to pay $2.8 million that had been appropriated by the Fono.
The Chamber believes the two best ways for American Samoa to deal with its public financing problems is by improving the productivity and efficiency of government operations, and increasing economic activity on the island.
The American Samoa Government could provide the same, or better, services to the public at a lower cost if waste and abuse were reduced and replaced with a strong focus on delivering better services for the government dollar.
As for increasing economic activity on the island, that longstanding challenge will take a sustained partnership between the government and the private sector in developing and implementing a realistic, multi-year strategy along the lines recommended in the 2008 Economic Advisory Council report.
The Chamber recommends that the effort begin by separating the economic development planning and promotion efforts of the Department of Commerce from the rest of that agency.
We believe ASG should have an office that is wholly and solely devoted to working with the private sector, existing and potential, to increase the kind of economic activity on the island that leads to more jobs, more investment, and more opportunities for our school-leavers.
The existing Department of Commerce has too many functions to give this important and difficult task its full attention, and there is no question that it will take a strong and focussed group to persuade businesspeople to invest their dollars in American Samoa.
The Chamber stands ready to provide helpful input to the ASG and Fono as our community tries to attract more private investment. We believe the practical and credible viewpoint that the private sector can uniquely provide will be an invaluable aid to the ongoing efforts to expand economic activity.
We wish to make it clear that the Chamber Board does not oppose these taxes primarily because we will have to pay higher taxes and fees. The truth is that few if any Chamber members will go out of business if taxes and fees rise. We will simply raise our prices and we will have fewer people on our payroll and we might make less profit.
The primary reason we oppose further tax and fee hikes is because higher taxes and fees will make it even more difficult to improve American Samoa’s economy than it already is. The private sector provides the investment that leads to more jobs and increased tax revenues, but businesspeople will not make investments in a community that places high hurdles to establishing a business and more high hurdles to making a profit.
American Samoa has always had trouble attracting investment; raising taxes and fees now (on top of the minimum wage increases) will make it even harder.
Source: American Samoa Chamber of Commerce board of directors
Thu, March 8, 2012