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New taxes planned to close revenue shortfall

PAGO PAGO, American Samoa, (Samoa News, Jan. 10, 2012) - Gov. Togiola Tulafono plans to submit to the Fono for consideration and approval a new wage tax bill with revenues being collected to again assist the government, while the other revenue measures submitted last year by his administration, and pending in the Fono, also need to be passed or "American Samoa Government (ASG) will remain in a deficit position" going forward.

Togiola also said that the government was in the black at the end of fiscal year 2011.

This is one of the issues the governor raised yesterday at his State of the Territory Address to a joint session of the Fono during the opening of the 3rd regulation session. The governor noted that this was his sixth and final address to the Fono. (He is barred by law from seeking a third consecutive term in office.)

As traditional protocol dictates, Sen. President Gaoteote Palaie responded to the governor’s address, which will be reported later this week in Samoa News.

As part of his address on the territory’s "state of the economy", Togiola recalled the 2% wage tax passed by the Fono last year that went into effect in March but expired Dec. 31, 2011. He says this measure added about $1 million into the government’s coffers, and combined with austerity measures, which included executive branch employees having their working hours reduced last year, helped the government survive in 2011.

The governor says these measures in large part allowed ASG to finish FY 2011 in the black with approximately $1.6 million in excess revenues.

However, despite the excess revenue, Togiola said, the overrun of fiscal year 2010 effectively leaves the current ASG financial position "in a deficit", adding that there are still debts the government has to pay, including the utility bill to ASPA that is now over $7 million.

He also reminded lawmakers that the government had also faced difficulty in providing required subsidies to the American Samoa Community College and the LBJ Medical Center in the last fiscal year.

Therefore, he said there is a need to approve other revenue measures submitted by the administration last year and pending in the Fono, such as the $2,000 corporate franchise tax, the increase of business licenses fees and the hike in the import tax for beer, alcohol and tobacco.

According to the governor, these measures as well as the wage tax were tailored specifically to deal with ASG’s total financial situation and without all of them being approved by the Fono "ASG will remain in a deficit position" going forward.

He said passage of the remaining bills would allow the government to pay current debts "during our time" so not to burden the community and the private sector now and in the future. He then revealed plans to submit a new 2% wage tax for Fono consideration and — hopefully — their approval.

Togiola thanked the Fono for passing the first wage tax which helped improve ASG’s financial condition. Additionally, he thanked the thousands of executive branch employes who sacrificed last year with the reduction in working hours in order for the government to remain open during the financial crisis.

The governor also reported to the Fono an update on the millions of dollars in American Recovery and Reinvestment Act (ARRA) funds from the federal government, saying that ASG was able to obligate 99.5% of all monies allocated to the territory due to an "unprecedented level of effective cooperation" between the ASG stimulus office and other ASG departments.

He said the total obligated money is $44.4 million, adding that actual expenditures of ARRA funds for the approved projects will continue to feed into the local economy throughout 2012.

Togiola said the year 2011 continued to present challenges for the territory’s overall economic condition, and it continued to suffer from economic woes that plagued the rest of the world.

The governor also briefed lawmakers on the state of the territory’s infrastructure, education, security and health care — including the hospital that he says is in need of financial support. Samoa News will report later in the week with more details on these issues.

Togiola also announced his plans to send to the Fono bills that would create new departments within the government: a Department of Labor, Department of Information Technology, the Department of Veterans Affairs and the American Samoa Environmental Protection Agency.

The AS-EPA is currently operating as an agency established through an executive order several years ago, and according to the governor, will have more authority to enforce current environmental laws and other matters as a department.

At the beginning of his address, Togiola recalled that in 2011 American Samoa lost some of its leaders such as the late Secretary of Samoan Affairs Tufele Li’amatua, Sen. Amituana’i Eteuati Sr., chief procurement officer Tauiliili Pat Tervola and others who served the territory with their hard work, service and leadership. A moment of silence was observed in remembrance of those who passed away last year.

"On this, my last address, I make one more plea for a concerted effort to move this government forward," said Togiola, who called on the Fono for a close working relationship of the two branches of government for a better tomorrow for the territory and the government.

Among political and traditional leaders who attended yesterday’s joint session were Lt. Gov. Faoa Aitofele Sunia, Chief Justice Michael Kruse and Congressman Faleomavaega Eni, who arrived Sunday night for his two public forum meetings scheduled on Wednesday and Thursday this week.

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