March 27, 2017 12:24 pm Last modified: 3:12 pm

V.I. Businesses Cannot Afford Higher VIESA Rates

Dear Source:

For the second time this year, the Board of Directors of the St. Thomas-St. John Chamber of Commerce has publicly criticized the V.I. Department of Labor for targeting territorial employers as the solution to the Unemployment Insurance Fund deficit.

The unemployment insurance tax is administered by the V.I. Employment Security Agency, better known as VIESA, under the Department of Labor. In May, 2016 generic ‘dunning’ letters were sent to many local businesses demanding unspecified payments that were purportedly overdue for Unemployment Insurance Fund contributions. Many of the letters were wrong, because the businesses had either closed or their payments had been made but not properly calculated or credited to their accounts.

At that time, the St. Thomas-St. John Chamber of Commerce issued a media release condemning the "deplorable government recordkeeping that must be corrected over and over again by business owners and taxpayers." Now six months later, businesses are once again facing increased tax rates for Unemployment Insurance.

Chamber of Commerce Board President Sebastiano Paiewonsky-Cassinelli stated, “Once again, I ask just how much more can the businesses of this territory shoulder in taxes and fees? We are still suffering from the burden of the “temporary’ increase in the gross receipts tax to 5 percent. While supportive of an increase in the minimum wage, the private sector is struggling to absorb the increases, which are set to increase several times in the following years. In fact, VIESA and the Department of Labor should recognize that because the minimum wage will go up every year, they can also expect an increase in payroll taxes collected every year, simply as a result of employees’ increased wages. So, increasing the unemployment insurance tax rate on top of those yearly increased contributions is actually imposing a “double tax” on employers, many of which are already barely hanging on.”

Paiewonsky-Cassinelli stated that we support the Department of Labor’s efforts to collect overdue amounts, when the funds are legitimately owed, but there are many other strategies that should be explored.

He continued, " We have been trying to schedule a meeting with the Commissioner of Labor to meet with representatives of the Chambers of Commerce to discuss this issue and to develop a workable plan that is not solely based on adding more to the tax burden of our employers. Local businesses are facing unprecedented challenges at the present time, so let us find a way to work together to solve this particular problem and the many others that trouble our beautiful Virgin Islands."

Board of Directors of the St. Thomas-St. John Chamber of Commerce

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