For years Guam has operated with an inflated set of property and building valuations.
The last and most recent valuation of property on the island was performed in the early 1990s resulting in a definitive islandwide valuation in 1993.
Since then the values of property plummeted with our economic downturn.
The island should have an islandwide property valuation every three years but none has been performed since the 1993 valuation.
As the Journal has revealed in its story in this issue the Guam Equalization Board has been quietly granting appeals on the aged valuations of property assets.
When a lowered valuation is granted the property tax is likewise reduced based as it is on the valuation of the land owners or building.
Those appeals are presently coming to a large extent from the hospitality industry whose members have understandably taken advantage of the board’s willingness to grant appeals. A number of informed individuals have also taken advantage of a legitimate appeals process.
While no corporation or individual can be blamed for reducing a tax burden the result is a loss of revenue for the Department of Revenue and Taxation and the government of Guam.
At present the loss is approaching $800 000. As word continues to circulate that loss of revenue will inevitably grow. The only question is how quickly given the board is working to expedite a backlog of appeals on this very issue.
Were the government to order another triennial assessment this may have the effect of lowering the government’s ability to borrow on the bond market. But bond market lenders are not stupid and an inflated valuation and worth does the island no good either.
Now that the Equalization Board is going its own way and reducing valuations on an individual basis the board is backdooring a reduction in the valuation of property islandwide whether deliberately or not.
The effect is the same as a new triennial assessment.
The government needs to act and offer parity to all businesses and citizens not just those who have found an avenue to reduce valuations.