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Guam lawmakers request probe into unpaid tobacco taxes

July 30, 2018

HAGATNA, Guam (AP) — Guam officials have requested federal agencies to investigate allegations of tax evasion and cigarette smuggling by a tobacco distributor.

Guam lawmakers requested last week for the FBI, the U.S. Attorney’s Office, and the Bureau of Alcohol, Tobacco, Firearms and Explosives to look the allegations of more than $14.5 million in unpaid local cigarette taxes over the past three years by Mid Pacific Distributors, the Pacific Daily News reported .

Guam Legislature Speaker Benjamin Cruz and Sen. Mike San Nicolas pushed for the federal probe following the distributor’s recognition of the unpaid taxes. Mid Pac controls about half of the island’s cigarette market, Cruz said.

Before imported cigarettes can be sold by a wholesaler on the island, the tobacco products are required to be placed in a bonded warehouse until the cigarette tax is paid. A way to avoid payment of the tax is to divert some of the cigarettes, Cruz said.

Authorities need to determine why the taxes weren’t paid, how the far back it goes back and how the cigarettes were possibly diverted, Cruz said.

John T. Calvo, president and general manager of Mid Pac, said the allegations are baseless, noting the distributor reported the discrepancies to the Guam Department of Revenue and Taxation.

“The claim that Mid Pac diverts or smuggles shipments of cigarettes to or out of Guam is entirely false,” Calvo said in a statement. “On the contrary, as a licensed distributor Mid Pac has sought to prevent the unlawful importation and sale of cigarettes by unlicensed persons on Guam without the payment of any taxes.”

After reporting the unpaid taxes, the tax department reviewed the situation, assessed additional taxes and agreed to a payment plan, Calvo said.

“Mid Pac is meeting all its tax obligations, and accounting for every cigarette it imports and distributes, and will continue to be a significant contributor to our island economy,” Calvo said.

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