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Business Community Against Proposed Sin Taxes

Despite statements made by Gov. Kenneth Mapp that members of the business community were in support of his proposed five-year plan to impose new local taxes, a statement issued by local tourism organizations and the two chambers of commerce says otherwise.

A white paper issued last week Monday’s State of the Territory Address instead proposed other austerity measures, such as increasing collections, cutting government staffing, and increasing certain ways would be the better way to go, along with legalizing marijuana.

“These new taxes will take money out of the pockets of Virgin Islanders, undermine economic development, damage our critically important tourism industry and not be accompanied by the serious reductions in recurring expenditures that we believe are vital to addressing financial sustainability,” according to the statement, issued by the chambers, USVI Hotel and Tourism Assoc., St. Croix Hotel Assoc., the St. Croix Retail and Restaurant Assoc. and the American Resort Development Assoc.

“It is clear to us that the half-measures contemplated by the proposed tax increases and the proposed plan will not be a step toward that ultimate objective, and will only worsen the current  situation by increasing the already untenable debt burden facing the territory, while imposing on the residents and businesses of the territory new tax burdens that will weigh on them, and only worsen a climate for economic development that we all must be working together to improve,” the statement goes on to say.

The legalization of medicinal marijuana has been advocated for years by Sen. Positive Nelson, who once again spoke about it after Monday’s address. Nelson added that while he has continued to point out the financial benefits of getting into the industry, there is still a need for the “people to get behind it,” which is what business community representatives appeared to do in their alternative proposal by describing the legalization and taxing of medical marijuana as a revenue enhancing measure.

“While the bill recently defeated relating to cannabis legalization is unlikely to create many jobs or new tax revenues, it is also not likely to be self-funding with respect to the development and operation of a proper regulatory infrastructure,” the statement said. “However, work being done on a new bill is likely to result in a self-funding regulatory infrastructure, many new jobs, and substantial tax revenue from tourists and other visitors.”

Related revenue sources include licensing and fees that should sustain the “initial regulatory infrastructure,” the statement said.

Business representatives added that they are not seeing the government’s commitment to improving economic conditions in the territory.

“Revenue increases will be agreed to and supported by the business community, if those increases bring with them the real and verifiable commitment on the part of the government, the Legislature, and the public authorities to reduce their spending, and their level of employment to a degree that ensures sustainability of governmental operations along with the revenue measures taken and those already in place,” according to the statement.

“Such new revenue measures must be those that will neither undermine economic growth nor protect sacred cows or protected groups of people or businesses, as we all know has taken place in the past. In our view, nothing meaningful will happen quickly,” it continues.

The proposal put forward by the business community also includes:

– increasing the filing fee for the Division of Corporations and Trademarks and the offering of same day and same hour options;

– expanding the authority of the Bureau of Internal Revenue to settle debts for immediate collection;

– obtaining a list of registered companies from Corporations and Trademarks and the Department of Licensing and Consumer Affairs, and seeing which ones are paying taxes;

– streamlining the EDC process by revising the application process to shorten the statutory time periods that have extended the application process, and implementing an automatic renewal system if no action is taken within six months of renewal date;

– requiring casinos and the new racinos to pay gross receipt tax;

– selling outstanding accounts receivable to collection firm;

– and requiring the government to buy local along the same terms as companies receiving tax benefits.

Business representatives also proposed looking at the size of government and how recurring expenditures can be reduced. Their plan calls for an assessment of every government department’s staffing levels over a 10-year period, and a reduction of staffing that will be in line with lowest level of appropriate service over the 10-year period. The implementation of a plan to reform the Government Employees Retirement System was also recommended, among other things.

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