On January 13, 2024, Bill No. 11-38 was introduced in the Guam Legislature, proposing a reduction of the Business Privilege Tax (BPT) from 5% to 4%. This proposal deserves serious consideration, not only because it affects businesses but because it directly impacts every island resident by influencing the cost of goods and services across Guam. The BPT is not just a tax on businesses; it is a hidden cost of living for all of us.

How We Got Here

In 2017, anticipating the federal Trump Tax Cuts, the Guam Legislature raised the BPT from 4% to 5%, initially as a temporary measure, then permanently. The goal was to generate an additional $60 million annually, helping maintain government services when Guam’s budget hovered around $800 million.

However, this increase effectively forced businesses to raise prices for consumers, as their operational expenses grew. Small businesses, in particular, faced tough choices: absorb the higher costs, raise prices, cut staff, reduce investments in their operations, or seek additional financing. For many, a 20% tax increase led to significant operational challenges, and these costs were inevitably passed on to consumers.

Escalating Government Spending and Its Impact

By 2019, the government budget had ballooned to $1.1 billion—a 27% increase in just two years—while the private sector and consumers were asked to shoulder the tax burden. Today, the government’s budget approaches $1.3 billion, yet the BPT remains at 5%, maintaining pressure on both businesses and consumers.

Despite receiving over $2 billion in unanticipated federal funds, including reimbursements and military-related revenues, any efforts to lower the BPT have been denied. Meanwhile, government expenditures continue to grow, creating a disconnect between taxpayer contributions and public sector fiscal restraint.

The Toll of the Pandemic and Current Economic Challenges

Since the COVID-19 pandemic, tourism, a major economic driver, has dropped from 1.2 million visitors in 2018 to approximately 400,000 annually. Businesses have shuttered or downsized, struggling to maintain quality and service.

At the same time, public sector salary raises and political appointments have increased government costs - paid for ultimately by customers at the cash register. Consumers continue to bear the brunt of rising prices amid inflationary pressures, all while government spending expands.

Why the Current Budget Path Is Unsustainable

Without immediate and decisive action, Guam’s government budget is projected to reach $1.5 billion by Fiscal Year 2027—an amount that risks becoming a permanent burden on future generations. The current trajectory threatens economic stability and places an unfair strain on families and small businesses striving to thrive in challenging times.

The Federal Tax Cuts and Local Realities

The Trump Tax Cuts were intended to ease financial pressure on households nationwide. Unfortunately, due to local fiscal decisions, Guam’s families have not realized these benefits in their daily expenses.

Some critics argue that lowering the BPT won’t reduce the cost of goods and services. But economics tells us otherwise: by reducing the tax burden, businesses gain the incentive to lower prices and increase competitiveness. A reduced BPT can stimulate growth, benefiting both businesses and consumers alike.

Fiscal Responsibility and Future Opportunities

Reducing the BPT would mean an estimated $60 million decrease in government tax revenue. Yet, the government closed Fiscal Year 2024 with a $51 million surplus—only to spend it quickly afterward. If the public sector exercises fiscal restraint and stays within its authorized budget, the government can afford to reduce the BPT without jeopardizing essential services.

Furthermore, despite looming federal budget cuts, billions in military spending will continue to flow into Guam, generating millions in new tax revenues. Increased H-2B skilled labor will also contribute through additional withholding taxes and consumer spending. These factors position Guam to responsibly lower the BPT—but the government must commit to reducing its own spending accordingly.

Call to Action: Let the Community Decide

We urge business owners, employees, and all island residents to contact their Senators to request an immediate public hearing on Bill 11-38. The decision to reduce the BPT should not be dismissed on speculation or hearsay; it demands open debate and community input.

Let the people have their say. Let lawmakers hear firsthand from those who live, work, and invest in Guam. It’s time to make smart, sustainable decisions that will ease the burden on our economy and support small businesses—the backbone of our island’s prosperity.

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April 22, 2025

The Guam Chamber of Commerce is a non-profit voluntary association of over 400 businesses, professional individuals, and firms united in their desire to improve business and build a better social and economic community in Guam. 

Contact the Guam Chamber of Commerce at 671-472-6311/8001, email info@GuamChamber.com.gu or visit our website: GuamChamber.com.gu