Friday, July 29, 2005

Taxes To Support Fono Allowances

The House will impose upon the people of American Samoa a ten-cent tax on 500-milliliter water bottles in the near future. The scheme devises 2 cents for salary increases for public school teachers, 2 cents for salary increases for professional medical personnel, 4 cents for the ASG general fund and the last two cents (you've guessed it) for Fono playtime.

We all knew this was coming. The Fono, with Governor Togiola’s help, increased their own allowances by 100% with FY 2004's $4 million surplus and leftover proceeds from the Val insurance settlement. Now there’s no more money, and the Fono is now targeting their own constituents with its tax increase to supplement their lavish lifestyles in Fagatogo.

The crime here is that the House is hiding behind good purposes to push its agenda. Our public schools, LBJ and other services are important to us. What a shame it is that our representatives would use these merits as a backdoor to confiscate more of our money. The Fono continually accuses private enterprises for making a buck after an honest day’s work (McDonalds, foreign businesses, etc.), and yet it has the nerve to demand more greenbacks for their allowances off our backs without even breaking a sweat. Hypocrites.

Before the ASG levies its tax on us, we should consider some important economic factors for a second. What is the elasticity of demand for 500-milliliter water bottles? In other words, how bad do people of Am. Samoa want them? If consumers can readily substitute the product or discontinue its use when its costs rise, a tax increase may only provide a short-lived surge in revenue collection. Budget director Magalei Logovi'i is right to worry that “future years’ collections” may drop. Consumers can easily adjust their current spending behavior quickly, yet the ASG doesn’t know by how much and to what effect. It never knows, does it?

According to Lawrence W. Reed, president of the Mackinac Center for Public Policy, “Congress dramatically boosted taxes on boats, aircraft and jewelry in [1990]. They expected $30 million in new revenue in the first year from the new taxes on those three things. We now know that the higher levies brought in just $16 million. We shelled out $24 million in additional unemployment benefits because of the people thrown out of work in those industries by higher taxes.” $16 million minus by $24 million equals $8 million in the red, which is where the ASG likes to be apparently.

Representatives, senators and the governor never get it. All they see are allowances without even considering the impact on ordinary people. The people of American Samoa should not give the Fono a free pass on this tax increase, under the guise of supporting public services, especially since not one reader of SamoaNews wrote in to support the Fono allowance increase. Don’t legislators brag about how well they listen to the people? I guess they don’t seem to do that when it comes to their own pay.

When Senators accused House representatives for not showing up to session, the people of American Samoa should have breathed a sigh of relief. Because whenever this legislature gets together, everybody should start running for her or his pocketbooks.

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