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Senatorial hopefuls agreed Guam needs to re-evaluate the government’s qualifying certificate program, saying millions of dollars are leaked out of public coffers as a result of generous tax breaks.
Most of the candidates expressed their opposition to a possible tax waiver reportedly being sought by the Guam Regional Medical City under the Guam Economic Development Authority’s QC program.
The QC program was among the focal points of discussion during the three-segment senatorial forum hosted by the Guam Medical Association at the Hyatt Regency on Wednesday night.
Prop A was not discussed during the forum but GMA polled the candidates, who — except for Republican candidate Frank Gumataotao — all rejected the bingo initiative.
Sen. Dennis Rodriguez, who is seeking a second term, said the government of Guam lost $39 million in gross receipt tax to the insurance industry, which he said raised $100 million in premiums paid to insurance companies over a period of five years.
The QC program, created under Public Law 8-80, was conceived in 1965 as an economic incentive tool to diversify industries on Guam and encourage investments that would strengthen the island economy.
Over the years, several business entities under the program have since grown but continue to receive tax waivers because their incentives are automatically renewed upon expiration.
Rodriguez said it’s time to revisit the program.
Sen. Ben Pangelinan slammed Gov. Eddie Calvo’s veto of Bill 80-31, which would have established a Qualifying Certificate Review Board to perform an independent cost-benefit analysis of the program.
Currently, he said, GEDA is the only authorized entity that reviews existing QCs.
Sen. Adolpho Palacios said the program must be modified to retire the eligibility of businesses that can afford to subsist without tax waivers.
Republican candidate Michelle Taitano noted the merit of the program. “QCs were initially meant to entice investment on Guam. That's good because we're offering them [an incentive] to come and invest and create jobs on island.”
What the program needs, she added, is “more of a monitoring process.”
No money to give away
The call for re-evaluation of the QC program resurfaced anew following reports that the soon-to-be built GRMC was intending to apply for the program.
Sen. Judith Gutherz said Guam welcomed the new hospital project on assumption that it would not see government assistance.
“When the investors came to Guam, they knew our condition. Now they are looking to the government for incentives,” she said. “We don’t have money to give away at this time. Maybe in the future we will be in the position to help. I will not support a tax rebate for the new hospital.”
Democratic candidate Leah Beth Naholowaa said taxes that were to be waived should otherwise be used to improve the conditions at the Guam Memorial Hospital.
Democratic candidate Michael San Nicolas said QCs should be evaluated to determine their impact on the local economy.
He said QCs should be granted to “locally owned companies with 80 percent of their employees making a decent living wage, or companies that are keeping 80 percent of their investments in the island.”
Debate moderator Dr. Nathaniel Berg noted that “no physicians on Guam receive GRT waivers yet they create jobs and provide a valuable service to the community.”
Republican candidate Tommy Morrison noted that the QC program is “a pretty genuine idea,” but “we don't want to create an environment that is unfair to our medical professionals here who have been contributing to our economy for many years.”
When processing a QC application, he said, the government’s fiscal crisis and tax base erosion must be taken into consideration.