Guam § 1421i - (a)). The Organic Act further provides under §1421i(a) that, in

§ 1421i. (a)). The Organic Act further provides under §1421i(a) that, in

addition to the mirror tax, the Legislature of Guam is authorized to “levy a

separate tax on all taxpayers in an amount not to exceed 10 per centum of

their annual income tax obligation to the Government of Guam.”

I Liheslaturan Guåhan further finds that in the Tax Reform Act of 1986

(Public Law 99-514: §1271), the United States Congress authorized the

government of Guam to “[enact] laws (which shall apply in lieu of the mirror

system) with respect to income - (1) from sources within, or effectively

connected with the conduct of a trade or business within, any such

possession, or (2) received or accrued by any resident of such possession.” In

order to implement this section of law, an implementing agreement must be

in effect between the United States and Guam. Such an agreement was

drafted and signed by the Governor of Guam, the Director of Revenue and

Taxation and the Assistant Secretary of the United States by April 5, 1989,

but is not in effect pursuant to Public Law 20-181. Once such an agreement

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is entered into and a local tax code is created, revenue, adjusted for inflation,

shall not be less than what was received by Guam the fiscal year preceding

the implementation year.

I Liheslaturan Guåhan finds that the government of Guam has

implemented a number of taxes to provide revenue. These taxes include the

Documents Tax found in 11 GCA, Chapter 20; the Annual Excise and

Admission Taxes found in 11 GCA, Chapter 22; the Real Property Tax

found in 11 GCA, Chapter 24; the Business Privilege Tax found in 11 GCA,

Chapter 26, Article 2; the Alcoholic Beverage Tax found in 11 GCA,

Chapter 26, Article 3; the Liquid Fuel Tax found in 11 GCA, Chapter 26,

Article 4; the Automotive Surcharges found in 11 GCA, Chapter 26, Article

5; the Tobacco Tax found in 11 GCA, Chapter 26, Article 6; the Use Tax

found in 11 GCA, Chapter 28; and the Hotel Occupancy Tax found in 11

GCA, Chapter 30.

I Liheslaturan Guåhan finds that Governor Ricardo J. Bordallo

established a Guam Tax Advisory Committee, pursuant to Executive Order

1986-09; that Governor Joseph F. Ada established the Guam Tax Reform

Commission in Executive Order 87-6; and that Governor Felix P. Camacho

established the Tax Conversion and Reform Commission in Executive Order

2003-04. Each of these commissions were formed to review and propose

changes to Guam’s tax structure and/or policies.

I Liheslaturan Guåhan further finds that a number of commissions

were established through legislative mandates to review and make

recommendations on tax policy, including the Guam Tax Code Commission

established by Public Law 20-181; the Guam Finance Commission

established by Public Law 22-74; and the Legislative Tax Review

Commission established by Public Law 27-56.

I Liheslaturan Guåhan finds that the Legislative Tax Review

Commission and the previous commissions served a useful role in allowing

policymakers and interested members of the community to review the tax

structure and policies on Guam and develop proposals for their reform.

Efforts at reforming Guam’s tax system must continue. Systematically

reviewing the major components of Guam’s tax code with members of the

community can grant policymakers the ability to focus on the larger picture

of what a reformed tax code can deliver for the people of Guam. A

systematic review would cover not only provisions that narrowly affect a few

businesses or a particular industry, but also how the code is structured to

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promote economic efficiency, equity, simplicity, enforceability,

accountability, and social responsibility.

It is, therefore, the intent of I Liheslaturan Guåhan to establish the

Guam Tax Commission to improve Guam’s tax structure and policies,

thereby promoting economic efficiency, equity, simplicity, enforceability,

accountability, and social responsibility.