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Hagatna, Guam -- In 2018, Guam stood at a crossroads. With federal tax cuts looming and the threat of a government shutdown hanging overhead, lawmakers made a fateful decision: raise the Business Privilege Tax (BPT) from 4% to 5%. The move was pitched as a temporary measure—a lifeline to generate an extra $30 million for the fiscal year while making the move to cut government spending by another $30 million to keep public services afloat.
But what happened next was not the austerity many feared. Instead, the government found itself awash in revenue, buoyed not just by the BPT hike but by a flood of COVID-era federal aid and a construction boom. The public sector flourished: no layoffs, no shutdowns, wage increases, and a growth in its annual budget from about $800 million in 2018 to $1.4 billion budget for fiscal year 2024, capped by a $60 million surplus.
Meanwhile, the private sector, especially businesses that relied on visitors and residents for income, faced a very different reality. For them, the BPT increase was not just a number on a ledger—it was a daily struggle. Margins shrank. Costs rose. Owners faced painful choices: raise prices, cut staff, or halt investments. For many, the math simply didn’t work. A one-point increase in gross receipts tax is a 20% jump in that cost line, and for businesses already operating on thin margins, that meant closures, layoffs, and dreams put on hold. Many residents packed their bags and moved away for better opportunities, taking their talent, skills, and family members with them.
Turning Point: The Push for Reform
On May 15, 2025, the Governor issued another call to keep the BPT at 5%, despite mounting calls for relief. Each year, millions in extra tax dollars continue to flow into government coffers, while the private sector is left to pick up the pieces.
But there is hope. There is a proposal to reduce the BPT back to 4%. Bill No. 11-38, introduced by Senator Shawn Gumataotao, would let businesses keep more of their hard-earned revenue, boosting net income and freeing up cash for immediate needs and future growth. The impact would be greatest for businesses with tighter margins—those who have struggled most under the current tax level.
The core question remains: How long can Guam’s private sector continue to bear this imbalance? What happens when federal aid recedes, and construction slows?
Why This Story Matters
This is not just a story of numbers and budgets. It’s about the choices that shape a community’s future. The BPT increase in 2018 may have saved the government from crisis, but at what cost to the island’s entrepreneurial spirit and economic diversity? Investors and residents alike are watching: Will Guam reward risk-takers and job creators, or will it continue to lean on the private sector to grow an already bloated government?
Guam’s experience is a lesson in unintended consequences. The government’s windfall has come at a price—a wound to the very businesses that power the island’s economy. As policymakers debate the future of the BPT, the stakes could not be higher. The next chapter depends on whether Guam can find the balance between fiscal security and economic vitality, ensuring the story ends not with division, but with renewal and shared prosperity.
It's time to reduce the BPT and pass Bill No. 11-38. Join us on June 9th at the Guam Legislature in downtown Hagåtña. Tell your stories in person, digitally, or on paper. Your business matters. Your employees matter. Your livelihood matters. Guam deserves a thriving private sector. Your voice can ensure a future, not just for you, but for others who will follow.
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May 26, 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
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