BY BOBBY SHRINGI
As the island (and the world for the most part) recuperates from the COVID-19 pandemic, it is critical that our government place a heavy emphasis on economic recovery, as we have a huge “re-set” button that needs to be pressed to get back to where Guam was prior to this global crisis. Our bread and butter market of tourism will certainly take some time to get back to pre-Covid arrival numbers, but we need to start opening our doors (carefully of course) soon to lay the building blocks. This means assuring that agreements are in place with key market jurisdictions in terms of accepting certain coronavirus testing to prevent the quarantine of visitors both ways.
Aside from tourism, the government needs to place a heavy emphasis on supporting our small businesses, so permanent closures that we continue to read about that are taking place nationwide do not become a common practice locally.
Reducing the Business Privilege Tax is a start, and there are discussions taking place in the Guam Legislature to approach this in a tiered manner. While some claim that reducing the BPT does not impact the cost of goods (an assertion I disagree with), the issue has a greater meaning now, as it is about small businesses closing down unless some relief is provided.
The governor recently enacted a measure by Sen. Joe San Agustin to increase both the qualifying and exemption thresholds of the Dave Santos Act. Therefore, any business that now makes between $50,001 and $500,000, would only pay 3% instead of 5% of BPT on the first $250,000 of gross income. Unfortunately, an amendment made by Sen. James Moylan, which would have increased the exemption level from $250,000 to $500,000 failed during the second vote. Apparently, it originally passed with a 8-7 vote and a second vote was immediately called after a recess, and two Democrats changed their votes (Senators Amanda Shelton and Jose Terlaje), thus the “new” threshold remains at $250,000. The positive is that small businesses would attain a little more in tax relief.
It is critical that the government identify ways to diversify the economy, and this means seeking ways to attract new industries. The legislature is entertaining measures to attract transformation, facilitation center and drone industries on island by including them on the list of entities which would qualify for benefits with the Guam Economic Development Authority. If passed, this means new jobs, taxes and other opportunities, and thus it certainly makes for a great start.
There also have been discussions on expanding agriculture and aquaculture industries, and while we have heard this line for years, now more than ever is a critical period for the legislature to establish plans to further its potential. Considering our regional proximity, the government needs to place a serious emphasis on these and other ideas if we are to truly diversify.
What is also important is building small and micro businesses, and this includes focusing on reducing the costs of filing a Limited Liability Corporation (Bill 133 in the legislature aims to do just that), and simplifying the licensing process. The government needs to prioritize a One Stop Business License Center and essentially create a more efficient permitting procedure. Incentives need to be established to encourage more small business entrepreneurship, to build financial independence. Reducing our unemployment numbers starts with not only assuring businesses are capable in hiring residents, but also that opportunities are established for individuals to start their businesses. While it is at it, hopefully the legislature considers enhancing incubator programs.
Although the legislature does not have the full authority to dictate policies associated with COVID-19 related restrictions that are being placed on businesses, there has to be further collaboration between the legislative and executive branches in terms of considerations of extending such limitations.
For example, minimal capacity at restaurants does have adverse impacts for those smaller entities when it comes to meeting their overhead expenses.
Businesses throughout the island have adopted policies to assure the safety of not only their patrons, but also their employees. This includes assuring that social distancing is mandated, masks are worn, cleanliness is prioritized, and temperatures are checked at their entrances. Some entities have also established sign in sheets to assist with contact tracing if needed. However there needs to be a serious collaboration between both branches to identify ways to expand these capacity requirements if possible.
We are definitely not out of the woods yet with this pandemic; however our government needs to do more with what little opportunities exist.
Millions in federal dollars are flowing in our economy today and will at least until the end of the year. But what next? If the government does not find ways to help small businesses and diversify the economy today, our island is in for a much rockier economic road in 2021. mbj
— Bobby A. Shringi is the sales and marketing manager for Moylan’s Insurance Underwriters Inc. and chairperson of the Legislative Review Committee at the Guam Chamber of Commerce. He can be reached at [email protected]