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HomeNewsArchivesPROSSER GAVE S.E.C. HIS OWN TAX PROJECTIONS

PROSSER GAVE S.E.C. HIS OWN TAX PROJECTIONS

By Jeffrey Prosser's own projections, he expected to pay nearly $73 million in income taxes alone on his telephone-related companies in the 10 years between 1998 and 2007.
That took into account the five years of near-total tax breaks he received for his V.I. Telephone Corp. from the Industrial Development Commission, but now calls into question the amount he says he would save under the land-for-tax-break bill now on Gov. Charles W. Turnbull's desk.
In a document Prosser filed in September 1998 with the Securities and Exchange Commission that paved the way for his Innovative Communications Corp. to buy the V.I. Telephone Corp., Vitelcom, VitelCellular and SMB Holdings Ltd. from Emerging Communications Corp., Prosser projected that by 2003, those companies would pay $6 million in income tax alone and by 2007, $18.8 million.
The projections in the SEC document also indicate a rate of growth for Prosser's V.I. Telephone Corp. at 4 percent a year and a growth rate for the cellular companies of 8 percent through the year 2000 and 5 percent to 6 percent thereafter.
The Prosser bill, which the Legislature approved 8-7 on May 22, gives ICC much more than just income tax breaks.
It would give 10 of Prosser's companies under the ICC umbrella and its principals complete tax breaks, including gross receipts, property tax, excise tax, franchise tax, business license fees, customs duties and income tax, for 30 years. The bill has no cap on the number of companies that ICC or its subsidiaries can acquire.
The ICC acquisition took EmCom's telecommunications companies from being publicly owned, and therefore regulated by the SEC, to privately owned subsidiaries of ICC, which is solely owned by Prosser and not subject to any kind of public scrutiny.
In exchange for the full 30-year tax ride for ICC and its 10 companies, Prosser would give 1,000 acres of land at Carambola on St. Croix to the V.I. government. He would also give $4.5 million to provide infrastructure on the land and another $9.95 million for public projects to be built on St. Croix, St. Thomas and St. John.
Part of the deal requires Prosser to build a 300-room hotel on the Carambola property, with the hotel receiving its own benefits in addition to the benefits to ICC. However, Prosser would forfeit nothing in tax breaks if he failed to build the hotel.
When The Daily News, which Prosser owns, broke the story April 1 about Prosser's planned "bailout" of the strapped V.I. government, it estimated Prosser's tax savings at $6 million a year for all 10 companies.
But the SEC documents seem to give credence to critics of the plan who contend that Prosser's savings would be far greater than the $180 million that the Daily News projected over the 30 years.
Estimates of what the actual tax breaks could mean in lost revenue to the territory over the 30 years have ranged up to $3.5 billion.
A section of the SEC document states that the factors Prosser used to predict the revenues and expenses could be "substantially less or substantially more than projected," something that has also been a concern of critics of the bill.
Prosser's projections of his income-tax obligations to the V.I. government for his EmCom holdings as reported to the SEC were:
— 1998, $4,090,000
— 1999 (IDC benefits kick in), $1,669,000
— 2000, $2,621,000
— 2001, $3,492,000
— 2002, $3,760,000
— 2003 (IDC benefits end), $6,182,000
— 2004, $11,543,000
— 2005, $12,330,000
— 2006, $13,791,000
— 2007, $18,822,000
TOTAL: $72,541,000
Neither Prosser nor Edwin Crouch, ICC's spokesman, were available Tuesday to comment on the SEC tax projections.
The Prosser bill is awaiting the governor's approval or veto, due this week. He could also opt not to sign or veto the bill, in which case it would automatically become law.

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