Proposed 10% and 20% Tax on E-cigarette Products in Guam

According to a report from the Guam Daily News, senators from both the Democratic and Republican parties in Guam, including Senator Joe San Agustin, are proposing a 10% consumer tax on all e-cigarette products in the first year, which would be increased to 20% in the second year.

Currently, Guam lacks a unified taxation regulation for electronic nicotine delivery systems (ENDS), commonly known as e-cigarettes. If proposed and enacted, this measure would separate the taxation of e-cigarette products from the existing tobacco retail category. However, it does not extend to regulated cannabis products.

Saint Augustine, the chairman of the Appropriations Committee, has announced that they are considering implementing taxes on Electronic Nicotine Delivery Systems (ENDS) after a significant shortfall in revenue from tobacco taxes in the Health Future Fund. In his statement, he noted that many individuals have shifted from smoking traditional cigarettes to using e-cigarette products, and this industry has evolved into a substitute for traditional smoking through the sale of e-cigarettes or other electronic means.

According to senators, implementing taxes on all e-cigarette products has the potential to create a new source of revenue for the government of Guam, providing additional funds for the fiscal and tax departments, as well as the Guam Memorial Hospital. Under this legislation, 40% of the funds collected through taxation will be allocated to support the enforcement efforts of the fiscal and tax departments, while the remaining 60% will be utilized to support the operation, maintenance, repairs, and supplier payments of the hospital.

Additionally, tobacco taxes have increased by approximately 33% over the past six years. Saint Augustine estimates that once this bill is implemented, it will generate about $800,000 in new revenue in the first year alone. This amount could potentially double in the second year. The bill also specifies that the annual fee for retail licenses will be $200, while the fee for wholesale licenses will be $2,000. The fiscal and taxation departments will be authorized to update the fee schedule every three years, with an increase limit of no more than 5%.

The bill's sponsors include Senators Telo Taitague, Roy Quinata, and Dwayne San Nicolas.