Why is Calvo pushing so hard against tax collections? The answer has been affecting your pocket

By Troy Torres

[email protected]



This pandemic, huh? Prices are skyrocketing. A bag of oxtail that once was $23 now costs nearly $40. A Pepsi bottle was $1.19 for forever; now it's closer to $2. Even the median range for clothes at Ross seemed to move from $8.99 a shirt to $12.99.


Everything is more expensive - food, power, gas, clothes, electronics - on Guam, except it seems for cigarettes.


How did the global pandemic discriminate against everything but tobacco? Unless of course the bigger reason for the higher prices is taxes, and not a virus. After all, the price increases started happening a couple years ago, way before coronavirus.


That's when senators and then-Gov. Eddie Calvo decided to raise the business privilege tax that, yup, you guessed it - affected the cost of goods and services on everything BUT cigarettes. The cigarette tax has remained as it was for years: $4 a pack.


Probably the worst part of the math on this abortion of public policy is why the BPT was raised, and how the cigarette tax plays the biggest part in it all. You see, every year the Guam Legislature relies on the ironclad consistency of every Guam smokers's addiction to cigarettes. Lawmakers like to talk about their desire for smokers to quit for the good of their health, but the cigarette taxes they pay are just too valuable to a senator's political career for most of them to truly mean that.


Every year, senators can count on about $40 million in cigarette taxes entering the Healthy Futures Fund. Most of that is supposed to go to fund health agencies, including Guam Memorial Hospital. In 2017, Mr. Calvo told senators GMH wasn't getting enough money; so he sought and succeeded in levying a 25 percent tax increase in the BPT in 2018.


After that a series of leaked documents followed by two audits confirmed that a cigarette wholesaler - MidPac, owned by the Calvo family - owed at least $14.7 million in cigarette taxes. The public's temper was tickled by the revelation that the $14.7 million figure was at a discount. Sources placed the original tax liability closer to $90 million, though that number has never been verified and the Calvo administration never was honest with the public about it.


Imagine that - you have to pay $40 for that bag of oxtail so that GovGuam & GMH could afford the three years familian Calvo got away with $14.7 million in taxes and x-million dollars more negotiated away by the Calvo administration. You know what would be ironic? If you're buying that oxtail at PayLess.


The reason MidPac got away with the tax liability during those years is this: the Department of Revenue and Taxation for decades wasn't doing its job and assessing the number of cigarettes the wholesalers were importing in order to tax the cigarettes according to the law. This led then-Sen. Michael San Nicolas to invent a solution: the cigarette tax stamp.


Eddie Calvo ignored the San Nicolas law, of course. Then, when newly-installed Gov. Lou Leon Guerrero didn't implement the solution, Sen. Tina Muna Barnes took up the issue and had a law passed requiring DRT to request proposals from companies that will do DRT's job and collect the taxes.


The unspoken logic was quite clear: no one could trust DRT and some of the cigarette wholesalers to not collude (no matter who is governor or who the director of DRT is) and corruptly conspire to steal the cigarette taxes already collected by the wholesalers from smokers ($4 a pack, remember? That's built in to the price of cigarettes already).


Recently, Sen. Sabina Perez, suspiciously buoyed by Calvo's cronies who managed to get elected into this legislature, tried to repeal the Muna Barnes outsourcing mandate. She wanted to dedicate some of the cigarette tax money to pay for more GovGuam employees to work at DRT and collect the taxes. Imagine that... senators throwing more money at the same place that for decades failed to do its job, expecting different results. Einstein said something about that behavior.


Ms. Perez's effort failed, but that hasn't stopped the Calvo machine.


One of our great sources of pride here at Kandit is that no one owns us. We owe no one. We are homegrown, and we have grown through good old fashioned hard work and daily grind. It provides us the freedom to do things, like call BS when Calvo-owned KUAM runs a so-called in-depth story about some imaginary political force stopping Perez's legislation.


In a recent video by KUAM's Chris Barnett, the reporter pushes the narrative that the privatization of cigarette tax collections somehow is political. It is one of the biggest insults to the intelligence of the public if the news agency expects us to discard the fact that it is owned by the same family that has benefitted from the old way of "collecting" cigarette taxes.


In the expose, Mr. Barnett features Perez and Republican senator and Calvo crony Telo Taitague prominently, both calling the outsourcing a political privatization. Taitague even calls out an unnamed company as standing in line to win millions of dollars in a future tax collection contract.


Well, who is this company, senator? Say its name, or shut up. We don't need to be fed any more spoonfuls of political rhetoric trying to recolor a plain red landscape of conduct that allowed the Calvos to escape paying millions in taxes that we, the common folk, had to pay for when our common folk taxes were increased.


Who is this imaginary political person who stands to benefit from the collection of cigarette taxes unfairly? Because as far as we can see, there's only one family here who is most interested and most affected by the fair collection of taxes - the one that got away with at least $14.7 million in taxes for three years.


The Barnett hit piece is funny, and so is Sen. Perez's logic. One line that keeps repeating from the Calvo camp is that the private collector of the cigarette taxes will make off with $17 million from its 10 percent collection fee.


Now, perhaps the math on that might be a bit strenuous for the likes of Sen. Taitague, but for the rest of us who passed sixth grade math, 17 is 10 percent of 170. So, if the private collector were to make $17 million off the collection of taxes, that means the collector will have collected $170 million for GovGuam. That's $130 million more than the $40 million now being collected.


Not only is that money we would have never otherwise seen without the collector, but does this mean an admission by Perez, Taitague and Calvo-owned KUAM that the cigarette wholesalers are evading that much in taxes annually?


If DRT is failing so miserably at collecting cigarette taxes that it is only assessing $40 million out of $170 million annually, and the only way we can collect the true taxes is by getting a disinterested non-corrupt private company to do DRT's job, then by all means, pay them $17 million. And please do send the evaders to jail.