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Hagåtña, Guam — The Guam Chamber of Commerce continues to advocate strongly for the passage of Bill 11-38 as originally drafted, and urges Senators to allow the legislation to move through its natural course without amendments. We are encouraged by the growing momentum behind this bill—momentum that could result not only in its passage but its ultimate enactment into law.
Bill 11-38 would reduce the Business Privilege Tax (BPT) from 5% to 4%, providing much-needed relief to all businesses operating in Guam. We believe this measure is timely, reasonable, and beneficial to our island’s economic recovery and growth.
However, we express serious concern regarding an amendment proposed by Senator Telo Taitague. The amendment seeks to maintain the BPT at 5% for federal prime contractors, while reducing it to 4% for all other businesses. This approach raises significant constitutional and policy issues, specifically under the Federal Supremacy Clause, as outlined in Article VI of the U.S. Constitution.
This proposal would likely be seen as conflicting with federal procurement policy, thus triggering preemption under the Supremacy Clause. Singling out federal prime contractors for higher taxation could be construed as placing a burden on the federal government’s ability to contract freely and efficiently, especially when tax costs are incorporated into bid pricing and ultimately passed on to the federal government.
If enacted, this amendment could render the entire bill unconstitutional, jeopardizing the broader goal of tax relief for all Guam businesses. Federal court decisions have consistently ruled that territorial laws - like those of Guam - cannot conflict with, or place undue burdens on, federal operations.
In addition to legal risks, this amendment may also damage Guam’s reputation as a cooperative partner with the federal government. Federal spending has been critical to our island, particularly during the COVID-19 pandemic, when local revenues were sustained by federal aid even as tourism halted and businesses shuttered. This amendment could send the wrong message to Washington and prime contractors about Guam’s business climate.
To be clear: yes, Guam must address tax leakages from federal prime contractors. We commend Vice Speaker Tony Ada for raising this issue and requesting stronger federal support in enforcing local compliance, such as requiring registration and allowing payment withholding for noncompliance. These are constructive and targeted solutions that do not risk violating federal law or disrupting local business relief efforts.
The Chamber encourages our Senators to reject any amendment that could undermine the constitutionality or viability of this bill, and to pass Bill 11-38 in its original form. Guam’s businesses—large and small—need tax relief now. Let us not stall that progress through well-intentioned but flawed revisions.
Thank you.
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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July 15, 2025
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