CONGRESSMAN FALEOMAVAEGA PROVIDES NEW OPTION

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CONGRESSMAN ENI F.H. FALEOMAVAEGA American Samoa U.S. House of Representatives Washington, D.C.

NEWS RELEASE August 15, 2001

TO AMERICAN SAMOA GOVERNMENT (ASG)
TO SAVE CHILD TAX CREDIT

Congressman Eni Faleomavaega has written to Governor Tauese Sunia informing him of changes which could be made to American Samoan law to enable a majority of taxpayers in the territory to obtain much of the child tax credit available under current law, yet still permit the American Samoa Government to retain the tax revenue it needs to provide public services. The change in law would require action on the part of both the Fono and the Chief Executive.

"Not long ago, Governor Sunia asked me for assistance in either repealing the applicability of federal child tax credit laws to American Samoa, or in enacting a new law which would authorize the Federal government to pay the entire child tax credit obligation to all eligible taxpayers in the territory," said Faleomavaega.

The child tax credit law has dealt a financial blow to the American Samoa Government. In 1998 and 1999, the local government paid out over $1.3 million to taxpayers based on their child tax credits.

"This has been a blessing to our local taxpayers," noted the Congressman, "but it has made it even more difficult for ASG to achieve financial stability. Under this provision of law, the majority of taxpayers who would normally pay two percent of their income in taxes to ASG get all of that money refunded to them, reducing significantly this source of revenue to the local government. To make matters worse for ASG, new federal legislation enacted this year doubles the amount of the child tax credit over the next ten years.

"In addition to the portion of the child tax credit ASG is obligated to pay under current local law, the Federal government has broadly interpreted federal law to include residents of the territories in a second portion of the child tax credit law," continued the Faipule. "Under this interpretation, the U.S. government has paid over $6.5 million to American Samoa's taxpayers in child tax credits since 1998. In many cases, all of the social security and Medicare taxes withheld from local wages are being returned to the taxpayers, yet the taxpayers continue to receive credit for contributing to the Social Security Trust Fund, and remain eligible for future benefits."

"After a careful review of current Federal and American Samoa tax law and how these laws have been implemented, I have determined that ASG can repeal the portion of the child tax credit laws that obligate it to pay a portion of the credits, and leave in place the portion of the laws that the Federal government has agreed to pay," declared Faleomavaega.

"I have suggested that the Governor and Fono consider this option as a method of restoring this traditional source of local revenue, and am available to discuss this and other options while I am home this week," noted the Congressman.

In his letter to the Governor, the Congressman expressed his concern in amending Federal law as applied to American Samoa, saying: "Under current law, American Samoa has total control over its tax law. The other territories are envious of this position and often complain about this difference. American Samoa has maintained more local autonomy than most other territories, and I believe this has served us well. Asking Congress to pass legislation to change our tax law, even for only this one issue, would invite additional changes, some of which might not be as welcome as the one we requested. We have total local autonomy on taxes, and I strongly believe we should keep it that way."

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