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HomeNewsArchivesFYI: Senator Russell Responds to Diageo Tax Exemption

FYI: Senator Russell Responds to Diageo Tax Exemption

The following material is being published, unedited, exactly as it was received via e-mail from the office of the government official named below, as a Source community service. Government office holders wishing to contribute to the bulletin board must e-mail source@viaccess.net. The Source reserves the right to choose what is published.
June 30, 2008 – It may appear that the tax exemptions granted in the Diageo agreement is contrary to existing law. On Saturday, June 28, 2008, on "Beyond Politics" radio show a caller asked about the tax benefits offered in the Diageo agreement. Section 4.1.2 of the agreement entitles Diageo to complete exemption from all property taxes, gross receipt taxes, and excise taxes. In addition, Diageo is also entitled to a reduction in income taxes. The legislature delegated to the EDA its responsibility of granting tax exemptions for economic activity. The question posed is whether the governor can grant such benefits in the agreement with Diageo.
"This question is an interesting question," states Senator Russell. He recalls several court rulings where the powers given to the legislature in the Revised Organic Act, were conveniently placed in the hands of other branches of government. For example:
1. A superior court judge ruled that the legislature could not place the Supreme Court of the Virgin Islands on St. Croix. That court held that the Legislature's action to place it on St. Croix was against the Revised Organic Act (ROA).
2. A district court judge also ruled that the Legislature cannot sue to enforce the rules of the legislature. However, the Governor can call a special session of the first branch to consider any matter, including nominations, irregardless of whether procedural laws set by legislature have been violated.
3. A district court judge ruled that the legislature cannot make laws to sanction or discipline local judges. This court held that such delegation of responsibility violated the ROA.
Based on these rulings, it may be unclear whether or not the executive branch can issue tax exemptions to Diageo Company without the consent of the first branch of government. "Regardless of the legalities, the governor has placed this agreement before a legislature that has consistently acquiesced to the bidding of the executive branch," stated Senator Russell. "Over the past couple of years the legislature has abdicated its responsibility to the other two branches of government, and there is no reason to believe that the integrity of the institution will prevail in this instance."

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