ST THOMAS, USVI -- Governor Kenneth Mapp has formally submitted to the 32nd US Virgin Islands Legislature his proposed “Virgin Islands Revenue Enhancement and Economic Recovery Act of 2017”, which he said is “designed to identify concrete proposals to close the gap in the continuing structural deficits, to curtail continuous borrowing to meet operating expenditures, and to enhance our ability to pay income tax refunds timely.”
Governor Kenneth Mapp
The proposed measures included in the bill will implement new revenue streams targeting specific non-essential commodities that, he said, will not result in a cost of living increases in essential areas.
Highlights of the proposed Act include a fee on timeshare units of $30 per unit per day of occupancy, termed an “Environmental/Infrastructure Impact Fee”. Given the number of such units in the territory, the fee is expected to generate $23 million in revenue, 85% of which would fund the government’s obligations to unionized and non-unionized employees as required by the settlement of VIESA lawsuit, won by employees forced to take an 8% pay cut during the last administration. The remaining 15% of collected fees would be allocated for the Tourism Advertising Revolving Fund.
The bill submitted also proposes new revenue from increases in the excise tax on imported alcoholic and sugary beverages, including beer, wine, distilled spirits, many soft drinks, and cigarettes. The additional revenues to be generated through this Act, and a reduction in the cost of operating the government, are projected to generate approximately $250 million over five years, the Mapp/Potter Administration estimates, if, as the governor urges, the legislature acts promptly to approve it.
Noting that rating agencies have continued to downgrade US Virgin Islands government bonds despite many encouraging signs in the local economy, Mapp, in his letter of submittal to the Senate president, emphasized, “We anticipate potential further deterioration in credit quality of the USVI does not take definitive action to address its current fiscal position.”