Guam is an unincorporated territory of the United States (U.S.). It is located in the Micronesia region of the Western Pacific Ocean and is the westernmost point and territory of the U.S.
Guam’s capital is Hagåtña, and the most populous city is Dededo. According to Wikipedia, the territory has a population of 168,801.
Recently a local resident of Guam, John Ryan filed civil lawsuits against three local companies who import alcohol to Guam under claims that they failed to pay taxes properly to the Guam government, resulting in losses suffered by the government.
The lawsuits were filed against Carson Guam, Permarch Guam Inc., and Titan Imports under the False Claims and Whistleblower Act in 2019 and 2020 in the Superior Court of Guam. Two of the cases were recently unsealed and made public after the Attorney General of Guam and the Department of Revenue and Taxation declined to intervene in the case.
The lawsuits expose, upon reviewing receipts for alcohol sold to retail stores, that distributors were found to be selling alcohol for amounts that were either less than the total tax value or almost exactly the cost of the total tax.
The lawsuits aim to recover hundreds of thousands of dollars in damages and civil penalties for the alleged violations by these alcohol companies, of the False Claims Act by avoiding paying alcohol taxes.
So far, there has been no investigation into the issue by the Department of Revenue and Taxation.
The companies Carson Guam and Titan Imports have denied the allegations and sought dismissal of the cases. In January 2021, Judge Elyze Iriarte denied Carson’s motion to dismiss. The Superior Court has set pre-trial conferences for the case against Carson for August 23 and the case against Titan Imports for February 4, 2022. The case against Permarch remains under seal.
If the allegations are true, the tax violations would have allowed these companies to flood the market with ultra-cheap alcohol products thus driving increased sales and heavier consumption. These alcohol companies would have thus thwarted the protective effects of alcohol taxes for citizen’s health and society’s development.
In Guam, alcohol excise taxes are deposited into the Healthy Futures Fund and used to support various government agencies like Guam Memorial Hospital and the Department of Public Health and Social Services. Thus, tax avoidance by alcohol companies significantly affects the government’s capacity for investing in the health of the people of Guam.