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Hagatna, Guam -- There are many myths out there about what companies would do in the event the Business Privilege Tax (BPT) was reduced by 1 point (5% to 4%). The reality is that there is no one-size solution for what any business could do with the savings element provided by this tax reduction.
Not every situation is identical, however, one statement is very clear: the public sector has heavily relied on the private sector to cover expenses over the years, even as government spending has rapidly increased.
Whether a business provides salary increases, invests in operations, upgrades its technology, hires additional employees, or merely places the money in a rainy-day fund, the reality is that any of these solutions would contribute to a healthier economy while promoting a business-friendly environment. It would also provide much-needed relief to many entities.
Detractors claim that the business climate is one where employers don’t take care of their employees, and reducing the BPT will result in the “rich getting richer”. Once again, not all business leaders are identical, and when you are in an environment with a limited labor pool, you need to take care of your employees. This is a necessity and is evident in reports from the Bureau of Labor and Statistics, which disclosed that in 2024, the average hourly wage in Guam was $21.39, more than double the current minimum wage of $9.25 an hour.
While certain industries, such as hospitality and retail, may hold positions at the minimum wage, the goal of any employer wanting to retain good employees is to provide timely raises and benefits. But these raises should be market-driven versus government-mandated. No two business entities or models are the same. What works for one may not work for another. Does the private sector challenge proposals that increase the costs of doing business in Guam? Absolutely, and this would be no different than any individual advocating against policies that increase the cost of living in any jurisdiction.
A good percentage of businesses in Guam provide health insurance for their employees, and there is a growing trend for providing retirement benefits that include the employer's contribution. Yes, many good employers out there invest in their employees because a healthy working environment leads to productivity, and that should, in many cases, lead to positive gains. Plus, the failure to provide benefits will result in a loss of good, loyal employees, the bedrock of any successful company.
Guam is also fortunate to have a vibrant business community deeply committed to being strong civic partners. Whether through contributions to worthy causes or events, sponsorship of your child’s sports team, support for medical fundraisers, or investment in community-driven projects, many island companies consistently step up to contribute generously. Our business sector is truly woven into the fabric of our community. Even during challenging times - such as typhoons and the pandemic – the private sector reliably rallies to support and uplift the community it serves right here on our island.
Over the years, the government has imposed tax increases and regulatory requirements that increase the costs of doing business. Despite the increase in the BPT implemented in 2018, the community is not experiencing a better hospital, safer neighborhoods, a better education system and facilities, or even an expedited business licensing or permitting process. However, the government’s spending has ballooned over the years – this is primarily at the expense of the private sector.
The time to change this mindset is now. The time to provide businesses with the opportunity to improve their employment packages, products, or environment is now, so let's lower the BPT from 5% to 4% and bring some balance back to the table.
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June 2, 2025
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