June 9, 2004 – The associations representing the territory's hotel and tourism industry hope to convince the Legislature to reject Gov. Charles W. Turnbull's fiscal year 2005 budget proposal to charge hotel guests an "environmental fee" of $3 a day.
"We have spoken to a few of our senators," Beverly Nicholson, president of the V.I. Hotel and Tourism Association, said on Wednesday. She said association members will lobby lawmakers as the FY 2005 budget process proceeds.
Sen. Adlah "Foncie" Donastorg, who chairs the Senate Finance Committee, said Wednesday he is finalizing the budget hearing schedule and expects to start the process on June 21.
Donastorg said he will not support the tax. "It's not wise to balance the budget on the shoulders of taxpayers," he said, adding that the business community is already reeling from economic struggles.
He agreed with the association's call for better management of government expenses in order to prevent the need for tax increases.
That's also the view of Fred Laue, president of the St. Croix Hotel and Tourism Association and owner of the Inn at Pelican Heights. "We must implement sound financial practices, and raising taxes is not the solution," he said.
Turnbull's 2005 budget, sent to the Senate last week, includes the hotel fee among other new taxes proposed as a means to enhance revenues. The governor said the fee would pay for infrastructural impact caused by visitors and estimated it would raise about $3 million a year.
Graeme Davis chairs the V.I. Hotel and Tourism Association board and is executive director of the Westin St. John Resort and Villas. He said hotel guests already pay the government $13 million a year through the 8 percent hotel room tax, in addition to airport landing fees included in their airfares.
The association is very concerned that hotel guests are being singled out and targeted for increased taxes, Davis said. "To nickel and dime overnight guests continuously is to risk our market position," he said in a release.
Nicholson said the proposed environmental tax also would apply to vacation villa guests.
Davis said all segments of the community must do their part to help resolve the territory's financial crisis. He noted that the V.I. hotel association already has agreed to the allocation of $1 million a year for five years from the government's Tourism Advertising Revolving Fund to the Police Department to help fight crime. By law money from the fund is to be used for tourism advertising and marketing.
"We recognized a community cannot successfully market and maintain itself as a tourism destination when it does not have a handle on crime," Davis said.
Nicholson said the tourism fund money began flowing to the Police Department several months ago.
Laue said other industries, businesses and residents also impact the environment but are not targeted by the governor's proposed tax.
Nicholson said the hotel industry recently decided that it would accept an increase in the hotel occupancy tax to 10 percent from the current 8 percent in exchange for the governor's support for a tourism board. "It's so critical to get our board. This is one of the negotiating points," Nicholson said.
Turnbull tried twice last year to get the room tax increased, first as part of his fiscal crisis recovery package and then as part of his proposed FY 2004 budget. The increase to 10 percent won Senate approval in November, but in December the governor vetoed the entire FY 2004 budget passed by the Legislature.
Senate and business sector efforts at establishing a public-private tourism authority have run into brick walls at Government House repeatedly in recent years. See "Tourism Authority Makeovers Don't Pass 'No'".)
The most recent rejection came in April, when Turnbull vetoed a bill to create a watered-down tourism board whose 13 members — a majority from the public sector — would have control of the territory's marketing dollars. He claimed the measure would take most of the power away from the Tourism Department.
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