Guam tobacco distributors back increase in tax‑stamp discount to 3.75% amid high equipment and operating costs

Bill 2‑05‑38, introduced by Senator Joette St. Augustine and presented Feb. 12 to the Committee on Finance and Government Operations, would amend subsection 6802(e) of Article 8, Chapter 6, Title 11, Guam Code Annotated to increase the discount for licensed tobacco distributors who affix tax stamps.

Sponsor testimony said the current statutory discount, described in the hearing as "4 tenths of 1%" (0.4%), does not cover the capital and operating costs distributors incurred to implement the stamp program. The bill proposes a fixed discount of "3 and 3 quarters percent" (3.75%). Senator Snoggess referenced a Department of Revenue and Taxation letter from Director Maria Lazama that recommended a discount "no more than 3.75% (equivalent to 15¢ per stamp)."

Ricardo C. Duenas, chief financial officer of WESCO Trading Company and a cigarette distributor, testified the industry absorbed heavy costs for implementation, including purchasing stamping machines that exceeded $150,000–$200,000 each, climate control investments for warehouses, and staffing of six to 10 people to operate equipment. He said the prior 0.4% rate "just didn't cut it." Duenas recommended the higher discount as a way to recoup operating expenses and allow compliance without imposing unsustainable costs on distributors.

Committee members asked for more fiscal detail. Senator Gumatauto and others noted the bill's fiscal note was incomplete: BBMR reported it could not determine fiscal impact absent data on revenues collected from stamp purchases. Senators also raised procurement delays in obtaining tax stamps (citing an OPA report) and asked the Department of Revenue and Taxation and BBMR for further accounting so the committee could assess revenue impacts and implementation oversight.

The hearing concluded with supporters urging committee markup and the Chair saying the committee will continue to accept written testimony for seven days.