Included in the administration’s revenue package now before the Fono are a bill that would do many things: change the computation of the excise tax on alcoholic beverages, tax non carbonated drinks which currently are not taxed, impose a duty on second hand items and gradually remove the 5% excise tax on goods for commercial use.
Instead of calculating the tax as a percentage of the contents of alcohol, the administration is proposing to have a fixed charge per container of alcohol.
For alcohol, the tax would be 35 cents per 12 fluid ounce.
Twnety cents of that tax will go to the General Fund to be appropriated by the Fono and 15 cents goes to repayment of the ASEDA bond.
When the bond payment is finished, the 15 cents goes to the General Fund.
For soda, the administration is now moving to tax non carbonated beverages containing sugar which would include energy drinks and flavored water, the same tax as soda: 15 percent per 12 fluid ounce
At last week’s meeting of the Chamber of commerce with the ASG Revenue Task Force, President of GHC Reid, the leading importer of beer and soda in the territory, gave these comments about the proposed changes.
Play Audio Olivia-soda-tax
The administration bill would also slap a 25 percent tax on heavy construction equipment that is used for construction other than for public roads, to include drill rigs, excavators, bulldozers, tractors and front end loaders.
The administration bill would also change the computation of the tax for second hand vehicles.
The bill proposes that the rate of the tax shall be the higher of 25% of the value declared by the importer or 25% of the fair market value of the item as determined by the Treasurer.
At present the tax on second hand vehicles is 30% of the price received by the importer.
The administration is also adding machines, machine parts, tires or other piece of equipment used to make a machine function tto the list of items that are subject to the tax for second hand vehicles.
Under this same bill the existing 5% excise tax for imports used for commercial purposes or resold will be reduced each year beginning in January of 2019.
The first year the tax will be reduced to 5%, in 2020 it will be 2 percent, then it drops to 1% in 2021 and by January 1st 2022, the excise tax will be no more.