The Virgin Islands Daily News
By Joy Blackburn
ST THOMAS, USVI (MCT) — Gov. John deJongh Jr. has submitted proposed legislation to the US Virgin Islands Senate that would enact a number of measures — including raising various taxes and freezing government workers’ salaries — as he announced in his State of the Territory Address last month.
USVI Governor, John deJongh Jr.
“These proposals are intended as the beginning measures to address the depth and scale of our current budgetary crisis that leave us with few good alternative options,” deJongh wrote in a letter accompanying the bills. “This package of reforms is the first step towards regaining control of our budget. Taken together they will move us in the right direction.”
The local government is projecting a budget deficit of $75.1 million for this fiscal year, while the shortfall for Fiscal Year 2012 is projected to be $131.5 million.
The governor sent the proposed bills to Senate President Ronald Russell on Thursday.
One of the bills, which the governor is calling “The Austerity Measures of FY 2011 and FY 2012 Act,” would:
Gross receipts tax
– Raise the territory’s gross receipts tax by 25 percent. The gross receipts tax is levied on every firm and individual doing business in the Virgin Islands, with few exceptions, and requires the business owner to pay a percentage of any money coming into the business as tax. The governor wants to raise that rate from 4 percent to 5 percent.
Under the legislation, the higher taxation rate would be effective from the date the law is enacted until June 30, 2013.
Room tax
– Raise by 25 percent the territory’s Hotel Room Tax and its tax on timeshare rentals. The governor wants to raise the tax rate from 8 percent to 10 percent.
Cell phone tax
– Establish a $1 Emergency Services Surcharge that telecommunications providers would collect monthly for the government on all telephone lines and cell phones.
The measure imposes the tax on the variety of ways people receive their phone service, including central exchange and other multi-station telecommunications services, as well pre-paid cell phones and digital services, such as voice over Internet protocol services.
The proceeds would be earmarked for the Emergency Services Fund, which is used to purchase equipment, professional services or supplies necessary to provide, maintain or improve emergency medical services, fire services or 911 emergency services.
The Austerity Measures bill also contains several provisions that would affect government employees, including:
– A provision in which government employees would not be paid for three legal holidays — Transfer Day, Holy Thursday and Dec. 26 — during 2011 and 2012.
The bill makes an exception for employees who are working on a regular or rotating duty shift that is necessary in the public interest, including those working at the hospitals and homes for the aged and those working in public safety, health or fire prevention.
– A provision that removes Sundays from the list of legal holidays in the territory.
– A provision that allows for a public employer — the government — to reduce wages, salaries or compensation to any employee or officer, as long as there are no other laws to the contrary and as long as wages do not fall below the minimum established by law, which is $20,000 per year for full-time government employees.
The second piece of proposed legislation, the Government Payroll Responsibility Act of 2011, would freeze government wages and compensation from the date it is enacted through Sept. 30, 2012.
The freeze would be in effect if a worker remains in the same position but would not apply to increases in compensation associated with a job promotion. The measure also would not affect overtime pay.
Under the bill, the freeze in compensation would apply to all branches of government, as well as to semi-autonomous agencies and government instrumentalities.
In his letter to Russell, the governor described the measures as “part of a wider program of changes that the current crisis demands we make if we are to avoid even more dire actions such as the laying off of many more government employees, the curtailing of important services and the imposition of even more taxes and fees.”
Some of the proposals have sparked controversy, including plans to freeze wages and to raise gross receipts taxes.
Both of the territory’s Chambers of Commerce have come out strongly against the increase in gross receipts taxes, saying it would raise the cost of living for everyone in the territory and that the additional tax burden would send struggling businesses over the edge.
DeJongh has, in the weeks since he gave the State of the Territory Address, reached out to various groups in the public and private sectors, including the Chambers and local lawmakers, in a move to gain support for the proposals.
He closed his letter to the Legislature by restating his “committment to work with all in the Legislature, as well as with all in our community, to find and implement that array of measures which we can collectively deem to be the best available to us at this most difficult of times.”
Copyright (c) 2011, The Virgin Islands Daily News, St. Thomas
