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HomeNewsLocal newsMapp Signs New Film and Video Tax Breaks

Mapp Signs New Film and Video Tax Breaks

Gov. Kenneth Mapp signed into law an act creating new film and video tax breaks, but said in a statement Friday he was doing so "reluctantly," because of some serious practical problems and major drafting errors in it.

Mapp also signed legislation appropriating money to fight the owners of the shuttered Hovensa refinery in court, appropriating funds for the territory’s hospitals, and making several zoning amendments and variances. He vetoed changes to the Legislature’s budget calendar to match the calendar year.

The tax credit bill, sponsored by Sen. Clifford Graham, originally repealed and replaced existing music and video tax breaks, but in response to concerns raised in hearings, was amended to instead add new large tax breaks to encourage video and film production, while leaving existing tax breaks for video and audio production unchanged. (See Related Links below)

Graham’s bill gives tax credits of 10 to 17 percent of the wages and salaries of Virgin Islands residents employed on the project, which the company can then sell to any other V.I. taxpaying business, if they owe less than the credit.

It also would give a break on the territory’s hotel occupancy tax, based on the number of rooms booked and for how many nights. The bill would create a new division within the Economic Development Authority to handle the film and video industry. And it would give cash "rebates" based on the amount of spending in the territory.

Mapp said in a statement, “I approve this bill notwithstanding the many technical and drafting errors contained therein after reviewing the history of this proposal."

"To veto the bill would not advance the ball and may signal to investors that we are not prepared to move forward in this area," he also said.

Mapp asked the Legislature to revisit and amend the legislation, itemizing areas of concern, saying:
– The bill refers to tax credits and tax rebates applicable to a participant’s tax liabilities. This is flawed language, according to Mapp, who said such a definition would include payroll taxes, which a tax credit against FICA, unemployment, workmen’s compensation and such other taxes is not legal nor permissible.
– The bill also adds a new subchapter IV that offers additional tax credits and tax rebates for the film industry on top of what is already in place, which could be interpreted as doubling the benefits. "Could the government find itself in a position of having to provide a 100 percent subsidy of the cost of producing a filming event, television program or music video?" Mapp asked.
– And the bill creates a new office within the V.I. Economic Development Authority, but the existing law, approved several years ago, already created one. "And further, the two created offices have primarily identical functions," Mapp said.

In two places, the bill appears to inadvertently specify "resident" or "nonresident" production companies in ways that put resident companies at a disadvantage, which Mapp said the Legislature would not have done purposefully.

“Despite these concerns, and in light of the aforementioned, I am with great reluctance approving the measure so the territory can proceed," Mapp said. "But I cannot implement or promote this program and the community cannot receive the intended benefits without further amendments from the Legislature.

“My legal team and members of my cabinet are ready to work with you to make final and necessary adjustments to the law. Please let me know how you wish to proceed," Mapp said in his letter to the Legislature.

Mapp vetoed legislation changing the Legislature’s fiscal calendar to coincide with the calendar year. Senators proposed the measure so that newly elected senators would not be bound by the budgets passed by their predecessors, nor make decisions affecting their successors.

Mapp said having one branch of government on a different budget calendar "would wreak havoc” on the government’s fiscal planning.

The governor approved legislation appropriating a $7 million supplementary appropriation for Gov. Juan F. Luis Hospital and $3.5 million for Schneider Regional Medical Center, but line-item vetoed a passage allowing the hospital to hire certain employees without treating them as public employees.

"I believe that this is simply bad public policy and, quite frankly, illegal," Mapp said. "Singling out certain medical specialists (codified employees) for removal from the definition of a public employee, as defined by (law) to pay them higher salaries than similarly situated employees will have a discriminatory effect on those physicians (employees) not listed. Should we adopt this policy to recruit off island police officers or teachers?” he asked.

Mapp approved legislation appropriating $1 million for legal costs of litigation with the shuttered Hovensa refinery’s owners.

He also approved several zoning matters, including a zoning use variance for Parcels No. Consolidated A1-A, A3B1 and A1-B Estate Lovenlund, No. 2 Great Northside Quarter, St. Thomas, to allow the continued use of a bar and restaurant. He approved a zoning use variance for Parcel No. 9M-1 Estate Nazareth, No. 1 Red Hook Quarter, St. Thomas, to allow the operation of a six-room bed and breakfast.

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