When Gov. Kenneth Mapp vetoed a bill changing how companies are granted V.I. tax breaks in exchange for local employment, he misconstrued what the bill does, according to Sen. Tregenza Roach, the bill’s sponsor.
The Legislature special ordered the bill during session Dec. 15 and passed it without debate. (See
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It treats non-resident hires by companies receiving special V.I. tax breaks as non-resident employees for the duration of those tax breaks. The employees themselves are not affected, but it tightens the employment requirements for the company receiving V.I. tax breaks, to require actual local hiring, rather than counting people who are in the territory because they were brought in from elsewhere. [Bill 31-0292]
Mapp vetoed the measure Jan. 4 issuing a statement a few days later saying it would have a devastating effect on the government’s ability to attract sound investment and grow the economy of the territory.
“As you are aware, this bill was special ordered to the floor without any committee hearings or any input from the public, the EDC Commission or the EDC beneficiaries who will be impacted,” Mapp said in his veto message. “If enacted into law, this bill will reverse the government’s gains for economic recovery and the progress achieved over the span of several administrations, with the U.S. Department of Treasury … This measure is, quite simply, inconsistent with the government’s position on residency for EDC compliance purposes which was submitted to the U.S. Department of Treasury.”
But Roach said in a statement that these concerns are unfounded, saying the residency requirements already provided to the U.S. Treasury have nothing to do with hiring criteria, but are addressed only to tax treatment of dividends and other income received by company owners or shareholders who seek tax benefits as bona-fide Virgin Islands residents.
“Mixing up the two does nothing to help our residents understand a situation which is a valid employment issue in the territory,” Roach said.
“A measure such as this will help our government determine if its objectives in these agreements are being realized and whether beneficiary companies are actually hiring persons who were already residents of the territory at the time of their hiring," Roach said.
Right now, according to Roach, companies may recruit any number of employees from the
mainland and then report them as resident employees by the following year. This, he said, raises the concern of whether our local workforce is ultimately seeing the benefit of these arrangements.
“We already provide waivers to allow these companies to recruit from the mainland when they can establish that the non-resident employee possesses skills, abilities and other capacities that a beneficiary company may not be able to find in the local workforce. All we ask is that companies be sincere in their stated commitment to employ Virgin Islands residents as well,” Roach said.
He added that "there is no argument that EDC companies benefit the territory and that new residents contribute to the life of the community as well as its tax base, but we also have to remember that underlying our economic development program is an expectation about the
development of our own human capital — that our workforce will grow in its skill level and other capabilities. We must remain committed to that ideal.”
Mapp also objected that the bill would have especially hurt Virgin Islanders living outside the territory who may want to return home to work for or own an EDC company — a contention Roach also disputes.
“This bill basically provides that if you are not a Virgin Islands resident at the time of hire or ownership of an EDC company, you could never attain such a status or ever be considered a Virgin Islands resident while employed with or owning such an entity during the benefit period," Mapp said in his veto message.
"In short, a Virgin Islander living in New York as a resident of New York, and who returns home to work for or own a beneficiary company, could never be considered a Virgin Islands resident hired for purposes of the residency requirement as long as he or she is employed by or owns that beneficiary entity."
Roach said the concern that Virgin Islanders who have relocated to the mainland and who may be recruited by such a company are somehow disenfranchised by the bill is unfounded.
"Specific sections of our economic development law already address such persons who can qualify as resident hires by demonstrating that they attended high school or university in the territory, or other established criteria such as being registered to vote in the Virgin Islands," Roach said.