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Hagåtña, Guam — In recent weeks, debate has intensified over whether Guam’s Business Privilege Tax (BPT) should be reduced from 5% to 4%. At a public hearing held on Monday, June 9th, it was clear that many in the private sector believe that the business community should not continue to bear the burden of government overspending.
In 2018, the government of Guam raised the BPT by one point in what was originally described as a temporary measure, which quickly became permanent after six months. This decision coincided with the Guam Legislature’s approval of the Fiscal Year 2019 annual budget, set at approximately $950 million. Today, the Governor of Guam is submitting a Fiscal Year 2026 budget request of nearly $1.4 billion – a staggering $450 million increase in government spending over just seven years.
Where did the money go?
Officials today are warning that reducing the BPT will harm public services such as schools, hospitals, and public safety. But the real question is: Since the government forced the private sector to increase the BPT by 25% in 2018, what did the government actually achieve?
With government spending increased by 47.37% over seven years (an average of 6.7% per year), have our residents seen:
- Better infrastructure?
- More efficient business licensing and permitting process?
- Improved GMH or schools?
- Safer neighborhoods?
- A decrease in our homeless population or illicit drug use?
Despite the spending surge over the past seven years, where are we with the quality of our lives and the stability of our island home?
A disconnect with the private sector
The Government of Guam has not only seen an increase from the BPT but has also seen an increase in withholding taxes and corporate taxes, in addition to the hundreds of millions in federal dollars received in response to the global pandemic, not to mention the billions of dollars invested by the Department of Defense for national security.
At the June 9th public hearing, the Governor’s Budget Director painted a rosy picture, claiming the economy is strong and that government statistics indicate that 8,000 new jobs were created in the private sector since 2020. How many of those 8,000 new hires were a result of H-2B arrivals on the island as part of the buildup work? They do count towards the new employment numbers. How many new jobs were created from businesses that support and supplement the buildup, including landscapers, caterers, heavy equipment rentals, environmental services, maintenance, and many more? Not to mention a surge in the civilian workforce under federal employment. It was also a disservice not to indicate that a portion of the 8,000 new jobs were a result of individuals who were rehired, as businesses re-opened their doors post-pandemic. Many of these were in the service industry, including moonlighters who worked multiple jobs to make ends meet.
It is important to remember that thousands of island residents in the private sector were out of a job, and were unable to collect a paycheck, place food on the table, or pay their bills, until federal dollars poured into Guam’s economy many months later. On the other end of the spectrum, the Government of Guam did not experience the challenges and despair that the employees of the private sector experienced as they continued to get paid throughout the entire pandemic shutdown.
Yes, businesses needed to recoup their investments and did the right thing by bringing back the bedrock of their operations, their employees. Guam was and is still in recovery mode, and the businesses that particularly rely on the tourism industry can attest to this. Many small and medium-sized business owners and private sector employees are still struggling to recover. Some had to close businesses, while others are catching up on bills. The government’s statistics don’t capture these hardships.
Those proponents who continue to advocate that repealing the BPT should result in savings at the cash register, we highly recommend that you visit our local businesses and talk to them. You will quickly understand that there is no one-size-fits-all solution. How each company will address any savings from a BPT reduction will be different. Some may apply the savings towards the cost of goods, others may invest in their employees, some may invest in inventory, others may put the savings towards training employees, and yes, some will invest in their operations (this does not necessarily mean on themselves, as one senator implied).
The bottom line
Guam’s government spending has soared over the past seven years, funded in large part by taxing the business community (BPT, Withholding Taxes, Corporate Taxes, etc.). Yet, the promised improvements in public services and quality of life remain out of reach. We contend that the Government of Guam needs to reassess its priorities and take a hard look at its current realities, just as the private sector has done over the past several years.
As the debate continues, the key question remains: Has this massive increase in spending truly benefited the people of Guam, or has it simply added to the burden carried by the private sector? We recommend that the Government of Guam do its job. Establish a cost-cutting plan to right-size the government, and roll back the BPT to ensure a thriving private sector, which in turn, can continue to pay taxes to fund essential public services and infrastructure.
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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June 13, 2025
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