$110.16 million in local revenue proposed for FY 2022 final budget

Pago Pago, AMERICAN SAMOA — Of the estimated $110.16 million in local revenue in the proposed final budget for fiscal year 2022, just over $72 million will come from taxes, with individual income tax the highest contributor, according to data provided in the Governor’s “Executive Summary” final FY 2022 budget report distributed to lawmakers on Monday.

It also says that the strength in the revenue sources component is credited to the surge in taxes, fees and fines, and charges for services.

TAX REVENUES

ASG estimates it will collect a total of $72.03 million in taxes for FY 2022, with more than $27.53 million under Individual Income Taxes; $23.20 million for Excise Tax-General; $16.30 million in corporate tax; $3 million for soda tax; and $2 million for the federal cover-over tax, according to the Governor’s executive summary report.

For FY 2021, the report says, total tax revenue is $71 million with $27 million from Individual Income Tax; $23 million from general excise tax; $16 million under corporate tax; $3 million for soda tax; and $2 million for federal cover-over tax.

“Despite the uncertainty with the [COVID-19] pandemic and the delta [variant] that seem to affect the global recovery effort including us locally, our economy has been resilient and vibrant,” the governor said in his executive summary. 

He pointed out that the unprecedented inflow of COVID-19 aid boosted business and trade activities thereby “shoring up our local revenue collection in the areas of excise tax, corporate and individual tax payments.”

According to the governor, corporate tax is projected to be higher this year compared to the previous year. “In this environment, more corporations are conducting more business and taking on more projects to meet demand,” he said. In addition, tax agents continue to perform audits to ensure proper corporate taxes are filed and paid.

He also said that excise tax collections have “stabilized and collection is expected to be slightly higher due to growing demand for import goods. Currently, he said the short supply of goods is common and there is extended wait for delivery of building materials and other supplies.

The governor claims that the supply chain will improve over time “as we move towards reopening of the borders as COVID restrictions subside.”

He explained that the ASG Treasury Department is currently working on a plan to address existing tax account receivables including ways to improve collection. Furthermore, Treasury continues to aggressively enforce all tax laws to ensure that corporations and all taxpayer file their taxes.

“The revenue trend from the individual tax payments is expected to increase from the previous year as more people with income, file to pay their fair share,” he said. “There is also the potential of increase in individual tax payments through the reduction in the number of tax non-filers.”

The Administration’s Mid-Year Performance Report — distributed to lawmakers on Monday — revealed that Treasury has “implemented a revenue collection working group to evaluate the collections and ensure all facets of cash collection points are maximizing the enforcement efforts.”

LICENSES AND PERMITS

ASG is projecting collections of $1.5 million from licenses and permits in FY 2022. And this is the same amount for FYs 2021, 2020 and 2019.

Revenue collections are expected to sustain levels similar to previous years, generally due to businesses obtaining licenses and permits to advance their projects through the pipeline.

“Due to influx of funding amid COVID-19, it is expected that actual revenue may exceed normal levels given the increase in economic activities implemented by both the private and public sectors,” the governor said.

FEES AND FINES

Revenues collected in fees and fines are projected at $5.5 million— a slight increase from $5.5 million in FY 2021 and $4.8 million in FY 2020.

This revenue stream “is projected to steadily improve as immigration revenues sustain steady collection on the number of individuals being processed despite disruptions amid the COVID-19,” the governor explained.

“Despite the delta variant, people are encouraged to be vaccinated granted that current plan is still in place for reopening the borders,” he said. “Then air traffic will open up and collection activity is expected to improve. Also, enforcement of local regulations and policies help sustain current levels.”

CHARGES FOR SERVICES

ASG is projecting to collect $7.62 million from charges for services — compared to $7.1 million in FY 2021. This revenue source includes charges imposed at the Port of Pago Pago; as well as ASG rents and leases.

Lemanu said port activities regarding cargo vessels will remain steady and improving amid COVID-19 restrictions. Furthermore, better management of government rent and leases must be continued through pursuit of more efficient collection and payment methods through a plan being coordinated by Treasury and Commerce Department.

OTHER REVENUE SOURCES

The three remaining revenue source categories are “Miscellaneous” — that includes interest income as well as judgments and settlements; “Indirect Cost”; and “Transfers-In” — includes special federal grants, local school repair fund, Interior Department grants-in-aid.

Miscellaneous Revenue is projected at $1.5 million in FY 2022 compared to $4.27 million in FY 2021. Lemanu said this revenue source is expected to significantly decrease primarily due to the lack of any insurance payment or disaster related settlement due for reimburse.

For “Indirect Cost”, ASG is estimated to collect $6 million — compared to $5 million in FY 2021. Lemanu said this revenue source is anticipated to increase relative to the surge in grant funded payroll for FY 2022. Also the Treasury will pursue all avenues available to ensure maximum collections on indirect cost is attained.

Under “Transfers-In” — with estimated revenues of $16 million in FY 2022 — a decrease of more than $200,000 from FY 2021 — the governor explained that the anticipated DOI grant-in-aid is expected to be the same as the previous year.

However, overall total with special grant and earmarks from excise tax to school repair is conservative amid COVID-19 impact on collections.

PLANNED EXPENDITURES

According to the governor distribution of forecasted revenues to planned expenditures was driven by the top priorities of this administration: education, healthcare, economic development (job creation); youth capacity building; senior citizens quality of life improvement; public safety; environment, and social services.