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'Stop tax evasion on cigarettes.' MSN offers federal solution as Cruz begins investigation

By Eric Rosario

U.S. Congressman Michael San Nicolas (D-Gu) made an unequivocal statement on what is believed to be the ongoing evasion of cigarette taxes on the heels of an announcement by Public Auditor Benjamin Cruz that he'll be investigating whether a Calvo-owned company has paid its taxes.

In a roll out of his legislation in the U.S. House of Representatives during Monday's annual congressional address, Mr. San Nicolas said:

"HR 3066 will clarify that cigarette tax enforcement on Guam is duly authorized federally so that the Bureau of Alcohol, Tobacco, and Firearms can step in once and for all and stop the flagrant cigarette tax evasion that has been going on."

San Nicolas was the senator in 2018, who blew the whistle on a secret settlement between the Calvo administration and Calvo-owned cigarette distributor MidPac. The company had failed to pay cigarette taxes between 2014 and 2017. DRT continued renewing MidPac's business license during those years though the company absconded on an unconfirmed original tax liability that was eventually discounted by the Calvo administration to only $14.7 million. The issue led San Nicolas to introduce and champion the Cigarette Stamp Tax Program to properly assess the taxes distributors owe on cigarettes, and Cruz to write to the U.S. Attorney and the FBI to investigate the Calvos.

Both the Calvo and Leon Guerrero administrations failed to implement the stamp tax mandate, and DRT has never disclosed whether the Calvos made good on its tax obligation. The failure to implement the program led to a taxpayer lawsuit against GovGuam to compel implementation. The ongoing uncertainty about the payment of taxes has led Mr. Cruz to begin an audit on alcohol and tobacco tax collections. The public auditor last week announced he will be including in his investigation whether MidPac ever made good on its negotiated tax settlement.

Watch this excerpt from the congressman's speech, and Kandit's story on the Cruz investigation:

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