Virgin Islands' hopes for its tourism tobacco industry will probably rest with the fate of one of two trade bills, either the African Trade Bill or legislation on the Caribbean Basin Initiative.
That's because the congressional attempt to exempt the Virgin Islands from a new law damaging tobacco sales to U.S. tourists will likely take the form of a rider rather than be presented on its own. The two trade bills have been identified as good vehicles.
Prompted by V.I. Delegate Donna Christian-Christensen, Congressman Charles Rangel (D-NY) introduced the original legislation in mid-March. By using the limits for duty-free purchases, his proposal would effectively allow the re-importation of cigarettes and other tobacco products to the U.S. for personal consumption.
Under a federal law that went into effect Jan. 1, no tobacco products that were sold for export (i.e. with tax exemptions) may be brought back into the U.S. mainland. That law took V.I. leaders and businesses by surprise and drew criticism because of its damage to tourist sales.
Brian Modeste, legislative aide to Christensen, said he learned in a recent meeting that "there's a slight problem with moving the Rangel bill on its own."
It seems the bill might itself become a target for a controversial rider, one that would prohibit the importation of cigarettes manufactured outside the U.S.
The safer route, Modeste indicated, is to let Rangel's proposal ride along with on one of the trade bills. Both have been in committee for about a year and action is expected on them soon, he said.
There is still no definitive data on just how valuable tobacco sales are to the V.I. tourism industry, but the $20 million tag suggested a few weeks ago by a local retailer appears too high.
The Bureau of Internal Revenue does not break down its gross receipts tax collections into the types of products sold, so it does not have a figure for tobacco-related gross receipts revenues. Nor is there a structured way to calculate the influence of tobacco sales on income tax or real property taxes related to a business – or to determine the influence of cheap cigarettes as a lure to draw customers into a store.
However, IRB does have hard figures for the amount of excise tax collected on tobacco products brought into the territory. In 1998, the figure was $1.29 million, in 1997, it was $1.27 million and in 1996, $1.26 million.
