AMERICAN SAMOA GOVERNMENT’S FISCAL REFORMS UP FOR U.S. DEPARTMENT OF INTERIOR REVIEW

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AMERICAN SAMOA GOVERNMENT’S FISCAL REFORMS UP FOR U.S. DEPARTMENT OF INTERIOR REVIEW

By Fili Sagapolutele

PAGO PAGO, American Samoa (December 28, 2001 – Samoa News)---U.S. Department of Interior officials are expected to arrive early in the new year to review and finalize an agreement over fiscal reforms for the American Samoa Government (ASG), according to Jack Kachmarik, manager of the Territorial Office of Fiscal Reforms (TOFR).

Kachmarik was responding to a number of Samoa News questions pertaining to ASG's proposed fiscal reform plans and TOFR’s work.

As part of ASG's $18.6 million loan from the U.S. government through the national tobacco settlement, $4.3 million was allocated by Congress for territorial fiscal reforms.

The money is to help facilitate implementation of a fiscal and managerial reform program designed to bring ASG's expenditures into balance with its revenues for years 2003 and beyond.

A condition of the loan requires formulation and execution of a fiscal reform plan.

Early last year, Governor Tauese Sunia issued an executive order to set up TOFR "with attendant responsibilities and authority to specifically confront and deal with this financial crisis."

The executive order said that TOFR shall cease operations not later than October 1, 2003, unless its continued existence is deemed to be in the best interest of the government.

Kachmarik said yesterday that the Interior Department conducted a preliminary review of the government's fiscal reform plans at the end of July.

ASG was then approved to use about $1.2 million of the $4.3 million "for starting purposes" in addition to continuing to work to complete the formulation of long term financial reforms.

Kachmarik said that DOI representatives are now scheduled to arrive in the Territory in either late January or early February 2002 "to review and negotiate a final agreement" for ASG.

And so far, fiscal reforms have been working well for ASG.

"I think we are doing okay with our fiscal reforms but there are still some more things that need to be done," Kachmarik said.

Outstanding debts such as FICA payments, tax refunds for 1999 and 2000 and the line of credit at the Bank of Hawai‘i, which were approved by the Fono early this year, have been paid off using the $22 million from the Affiliated FM settlement.

"These are some of the outstanding debts that the government has gotten rid off," said Kachmarik.

The Governor had also proposed a number of measures, such as increasing the alternative minimum income tax rate, a tax of 10 percent on the gross revenues of the communications industry, removing the government's exemption from paying excise tax and creating a Bureau of Revenue within the Department of Treasury.

Kachmarik is also the manager of the Bureau of Revenue, which was created by executive order. Formal establishment of the Bureau by statute is pending a legislative review and approval.

A new alternative minimum income tax rate of four percent is now a part of local tax laws as is the deletion of the ASG exemption from paying excise taxes.

Not yet introduced in the Fono is the Governor's proposed 10 percent tax on the communications industry's gross revenues.

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