By Joe M. Arnett

Joe M. Arnett
Tax Advisor
Deloitte & Touche LLP

Once again, we have had the privilege of discussing with business owners in Guam and Micronesia their results from 2019 and their plans for 2020 and beyond. Painfully obvious is the effect that COVID-19 is having on private businesses and their employees, as record business levels in 2019 for many have turned into a financial disaster in 2020. 

Optimistic financial planning for 2020 has become a switch to survival mode for many — and they are the lucky ones. 

Others have gone out of business completely and are unlikely to return. Reduced revenues for even the largest of business concerns has been 50% or more below the 2020 level in many cases.  

Unless they are construction companies, grocery stores or franchised, drive through fast food restaurants, business revenues are seriously deteriorating island wide. The effect on private sector employees has been equally devastating with more than 30,000 staff, employees and friends without jobs.  Most predictions by our participants do not see the beginning of a recovery for one to two years.  Significantly lower government revenues are expected through the next fiscal year as businesses recover taxes paid in prior years by carrying back those 2020 losses to prior, profitable years.

The tourism industry is essentially closed and the prospects for a quick reopening dim with the continued restrictions in place and the lack of rapid testing procedures to accommodate hundreds of daily visitors, were they to come. 

Furloughs and permanent job losses continue. 

Despite these challenges business owners are working overtime to adapt their business strategies to the new economic reality with plans to survive until the economy begins to recover.

Fortunately, the American taxpayer has underwritten the steep drop in local government revenues by giving the Government of Guam approximately $1.8 billion. 

We trust the government to spend these funds wisely for all the residents of Guam with transparency. 

The business leaders we had the privilege of speaking with (virtually) are retooling their business plans to respond to the continuing downward trend and look forward to discussing solutions to these problems with government leaders. 

It will take all of us working together to design a plan to lead us out of the current economic depression.