Lawmakers have approved a rollback of the Business Privilege Tax. The bill now heads to Adelup, where the governor has 10 days to sign, veto, or allow it to become law without her signature.

Even with the vote, the same question hangs in the air: Can Guam really afford it?

A familiar “temporary” promise
On Guam, the word “temporary” has a long shelf life. Ask the students still learning in “temporary” classrooms built decades ago. When the BPT was raised from 4% to 5% in 2018, it was sold as a temporary fix after federal tax cuts carved a hole in the local budget. That “bridge” has lasted six years — and those federal cuts are still in place.

Since then, portions of the BPT have been earmarked for health care, education, and other priorities. Rolling it back today is not a return to 2018. It’s a step into a very different fiscal landscape.

The fiscal math
Budget hearings laid it out plainly:
- A 0.5-point rollback will cost about $40 million in annual revenue.
- A full point means about $80 million less — roughly 8.3% of Guam’s General Fund revenue.

Supporters say Guam can afford it, citing lapsed funds and a healthy reserve. Critics counter that lapsed funds are often tied to agencies without the capacity to spend them and that reserves exist for emergencies — not routine operating costs. Meanwhile, schools are still overcrowded, Sanchez High School is crumbling, and GMH remains under strain.

The risks in play
The fiscal risks are immediate:
- Refund pressure. Because of federal tax changes, Guam expects to pay an additional $10 million to $18 million in refunds this year — squeezing flexibility even further.
- Federal uncertainty. Agencies warn of shrinking grants. Guam EPA, for example, faces the loss of key funding — meaning slower permits unless the local budget fills the gap. That’s the kind of inefficiency that really stifles business growth.
- Price relief not guaranteed. The last BPT increase didn’t translate into higher consumer prices. A rollback is unlikely to translate into lower ones.

In short: the risks are real, and they arrive before any benefits.

Winners and losers
Large retailers, hotels, and banks stand to gain the most from a gross-receipts tax cut. Smaller businesses would see marginal relief, and many prefer targeted measures like simpler tax filing, hiring credits, or better government efficiencies.

While Guam’s BPT is technically a gross receipts tax, in practice it functions much like a sales tax elsewhere in the U.S. At 4–5%, it’s on the low-to-middle end compared with state sales taxes, which typically run 4% to 7% before local add-ons that push totals closer to 9% or 10% in some cities. Hawai‘i’s General Excise Tax — a close cousin to Guam’s BPT — is also 4% statewide, with county surcharges. The difference is that Guam applies the tax broadly at the business level, rather than at the cash register, which makes the rate look high when compared to specialized “gross receipts” taxes in states like Ohio or Washington that are often under 1%. But for consumers, Guam’s BPT is the functional equivalent of a modest sales tax, without the patchwork of state and local add-ons.

It’s also worth noting that Guam’s 5% BPT has spared the island from many of the layered taxes common in other states — county levies, regional sales taxes, or steeper property taxes. Guam’s property tax is among the lowest in the country. Without the BPT, policymakers might feel pressure to revisit property taxes or introduce new fees. That trade-off deserves to be part of the conversation.

What happens next
1. The governor decides. Within 10 days, she can sign, veto, or let the rollback become law without her signature.
2. If vetoed, the override math matters. It takes ten votes. While the budget bill passed with 11 votes, support for the rollback itself has been closer to eight.
3. If it becomes law, fallout must be managed. The budget sets the levels at which the government can operate. If revenues fall short, it’s classrooms, clinics, and safety nets that will pay the price.

The long game
Rushing into a full rollback now, just as federal support wobbles, is risky. A compromise shouldn’t be about splitting the difference. It should be about sequencing risk.

Guam shouldn’t roll back the BPT until the numbers — and the federal picture — make it safe. Otherwise, it’s less a rollback and more a gamble.

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