The administration’s sales tax bill which was introduced in both chambers yesterday proposes a January 1st , 2018 effective date for the 7% sales tax.
The bill proposed special allocations for revenues from the sales tax.
- 6% would be earmarked for the repairs, renovations and upgrading of all public schools and equipment and 500,00-0 is to be set aside for student financial aid.
- 6% percent goes to the LBJ Operations Fund.
- 6% goes to the off island medical referral program ;
The bill also repeals the 2% wage tax effective January 1st, next year.
All retailers have to pay the sales tax at the rate of 7% of the gross receipts from the sale of all tangible personal property sold at retail in the territory.
The bill lays out this method of collection: At the time of the sale, every retailer must collect the tax from the buyer and give to the buyer a receipt in a form prescribed by the treasurer.
The sales tax does not apply to prescription drugs and medical services; fresh food sold in open air public markets, roadside stall or from the growers, however this exemption does not apply to the sale of imported food.
Another exemption to the sales tax is occasional sales of tangible personal property.
Non profit organizations are exempt from collecting the sales tax when selling items as part of infrequent and occasional fundraising activities where the profits are used for religious, education or charitable purposes.
In addition, the sales tax doesn’t apply to petroleum products.
According to the sales tax bill, all retailers must apply for a resale certificate for each place of business where retail activity may take place.
The bill does not state whether the resale certificate will cost the applicant any money.
Retailers are required to maintain sufficient record of each transaction so that accurate monthly returns can be filed with the Treasurer.
The form of the returns will be set by the Treasurer and must be filed on the 10th day of each month for the period ending on the last day of the previous month.
The Fono will be taking a month long break after Friday’s session and any hearings on the sales tax bill would not happen until lawmakers return from their break.
