The Committee on Finance, Chaired by Sen. Kurt Vialet, met to receive testimony on and reconsider Bill Nos. 32-0005 and 32-0007 - both bills regarding the Government's Five-Year Financial Plan - following an early morning protest from members of the private sector who oppose the measures.
Testimonies given by private citizens and the Governor’s financial team conveyed the serious implications if the territory continues to plunge further into fiscal collapse. “At this point, a series of bad decisions were made, without thinking about the future generations,” stated Sen. Vialet.
Bill No. 32-0005, proposed by Sen. Neville James, Sen. Kurt Vialet, Sen. Nereida Rivera-O’Reilly and Sen. Myron D. Jackson, was passed favorably 5 to 2. Voting in favor were Sens. James, O’Reilly, Vialet, Brian A. Smith, and Marvin A. Blyden. The Bill seeks to amend and enhance revenues for the Territory by implementing excise taxes on tobacco products, alcohol beverages and on sugar carbonated beverages, and the establishment of a new timeshare fee. The Virgin Islands Code currently includes a timeshare occupancy tax of 10.5%.
The Bureau of Internal Revenue (“BIR”) will assess on and collect from timeshare owners the existing hotel room occupancy tax of 12.5%. Accordingly, Title II of the bill would repeal the timeshare occupancy tax. In addition, the Act establishes a new timeshare fee, the Environmental/Infrastructure Impact Fee, in the amount of $25.00 per day of occupancy of any timeshare in the Virgin Islands.
The measure also authorizes revenues generated from the Environmental/Infrastructure Impact Fee to be allocated as follows: 25% to the Virgin Islands Tourism Advertising Revolving Fund, 50% to the General Fund and 25% to the Hospitals. Section 3 significantly amends Title 33, chapter 3, section 42, which establishes the rates and base for certain excise taxes on imported goods. As currently in effect, the statute imposes very low tax rates on most liquor and tobacco products. Imported beers, for example, are taxed at a rate of $2.08 (for foreign beers) or $1.55 (for U.S. beers) per case or each 24 bottles Whiskies and other liquors are generally taxed at a rate of just $6.00 per case.
The purposed increases in the excise tax rates on liquor and tobacco will provide the benefits of both increasing revenue and supporting public health. Products on which the 20 excise tax rates will include:
Foreign and U.S. beers, from $2.08 and $1.55 per case, respectively, to $6.08 and $5.00; and Cigarettes, from 45% to 45% plus $8.00 per cartoon; and Carbonated beverages, from 3% plus $0.36 per case plus $0.005 per fluid ounce (except those in reusable canisters, which will now be taxed at 4%); For most spirits and liqueurs from $6.00 per case (or $2.50 per wine gallon, if greater) to 10% of value; and for wines and brandies, from $2.04 per case (or $0.85 per wine gallon, if greater) to 10% of value. Cumulatively, the proposed excise tax rate increases, are projected to generate approximately $12.2 million in new revenues annually. Chairman Vialet added that these items in which the taxes are proposed, are not necessities or essential for our consumption.
Bill No. 32-0007, proposed by Sen. Myron D. Jackson and Sen. Nereida Rivera O’Reilly, was passed favorably 5 to 2. Voting in favor were Sens. O’Reilly, Jackson, Vialet, Blyden and Smith. This Bill seeks to amend by adding the following language at the end: ‘Commercial real property includes buildings with residences of 5 or more units,’ and Subsection 2301 is amended to include a new subsection to read: ‘In no event, may the application of exemptions and credits reduce the amount of tax due for any real property to an amount less than $360.’ “Times have changed, so there’s no way we can sit here, do nothing, and believe we will be able to move forward and solve our problems.” said Chairman Vialet.
The Bills were both passed favorably to the Committee on Rules & Judiciary for further consideration.