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Thursday, December 2, 2021
HomeCommentaryOp-edV.I. Businesses Continue to Bear Brunt of Proposed Tax Increases

V.I. Businesses Continue to Bear Brunt of Proposed Tax Increases

The Board of Directors of the St. Thomas-St. John Chamber of Commerce is protesting several provisions of Gov. Kenneth Mapp’s proposed "Virgin Islands Revenue Enhancement and Economic Recovery Act of 2017." The measure includes increased taxes on beer, alcohol, cigarettes and carbonated beverages, or what is often called a "sin tax."

The governor contends that this tax will target visitors rather than residents and that the only burden on local businesses will be collecting these revenues for the V.I. Government. Gov. Mapp has called for a special session of the 31st Legislature to consider his proposal on Tuesday, December 20.

Speaking on behalf of the Chamber’s Board of Directors, President Sebastiano Paiewonsky Cassinelli stated, "We have a huge problem with the proposed increase on spirits and tobacco. Tourists buy where prices are the lowest. The territory is already losing Gross Receipts taxes because tourists find cheaper prices in cruise ship stores, or on St. Maarten and other Caribbean destinations. It is important that we note that the Virgin Islands is receiving fewer cruise ship calls and passengers and this trend is projected for the next several seasons. If the Virgin Islands Government increases duties on these items, wholesalers will raise the prices charged to retailers, who will in turn increase their prices to local consumers and tourists, which will result in fewer purchases. It goes without saying that declining sales reduce Gross Receipts tax collection, personal and corporate tax receipts, and lead to a reduction in employment. The law of diminishing returns. Moreover, and what is most disturbing, is the speed with which the special session was called, the absence of any cost-benefit impact analysis that we can all review, the absence of a committee process which is not beneficial to the business owner, the local consumer or visitors whom we compete for with other jurisdictions."

Paiewonsky Cassinelli added, "We find it incredulous that tax increases are being proposed right after it was announced that the gross domestic product of the Virgin Islands increased for the first time in five years, tax increases that will reduce local and tourist spending in the territory.”

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He continued, "We ask the members of the 31st Legislature to remove the ‘sin tax’ provisions of the Virgin Islands Revenue Enhancement and Economic Recovery Act of 2017 if they decide to pass this bill and let us undertake a proper analysis and discussion during the 32nd Legislature. The Virgin Islands face very difficult decisions in the coming months, and we need a disciplined decision making process that includes all stakeholders.

Editor’s note: Sebastiano Paiewonsky Cassinelli is the president of the Board of Directors of the Virgin Islands Democratic Party.

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