US Guam: Cigarette Tax Collections May Be Lower Because Importer Is Using Tax Credits to Offset the Tax

Source from:  Pacific News Center (PNC) (gu)  01/17/2013

While Public Health Director James Gilan is recommending an increase to tobacco taxes there is no word on whether or not all taxes from tobacco have actually been received.

In fact Rev & Tax has said that there may have been a decrease in the amount of taxes received from cigarettes because an importer of cigarettes may be using tax credits to offset taxes.
 
Rev&Tax Director John Camacho says he still has to verify if this is indeed the case and what the amount of taxes may be but during a hearing held a couple of months ago the agency testified before the legislature that the use of tax credits may be the cause for receiving less taxes in the healthy futures fund.

The healthy futures fund was established through a law that increased the tax on cigarettes and other tobacco products. These taxes are supposed to go to the fund to help pay for anti-smoking education and health programs for tobacco related illnesses, but right now it's not clear how much money has actually been received.
 
"We received testimony from Rev&Tax that said part of the decrease might be the fact that a tax credit had been utilized by a importer and they used tax credit to offset their cigarette tax and so in the budget bill we I believe we included a provision to try to address that to make sure that it couldn't be used against the healthy futures fund or one of the tax credit bills we insisted that it not be used against the healthy futures fund," said Cruz.
 
The Vice-Speaker says that during the hearing it was also brought up that the tobacco importer had bought the tax credits from another company. Enditem