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Charlotte Amalie
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More Senators Oppose Innovative Tax Breaks

March 29, 2005 – Last week telephone company officials and members of the Economic Development Commission skipped a Senate hearing. If it was their strategy to quiet criticism of the EDC proposal to grant millions of dollars in tax breaks to the phone company, it backfired.
Sen. Louis Hill said Tuesday, "What some Senate members of the minority caucus heard at that hearing convinced them the EDC was clearly not justified in granting those benefits."
He said the EDC program "is to encourage new businesses to come to the Virgin Islands. It is not a form of corporate welfare."
Hill wrote a letter to Gov. Charles Turnbull Tuesday "on behalf of Sens. Craig Barshinger, Pedro Encarnacion, Juan Figueroa-Serville, Neville James, Ronald Russell and myself" urging the governor to reject Innovative Telephone's application for benefits.
Hill has been expressing open opposition to the benefits, as has Sen. Adlah "Foncie" Donastorg. Donastorg wrote to Turnbull March 11 urging him to reject EDC's decision. "You are the sole individual that can put an end to this travesty," Donastorg wrote, adding that Innovative Telephone –– formerly Vitelco –– had violated the terms of its previous contract and for this reason alone should not be given more tax breaks.
(See "Senators Looking at EDC Secret Deal With Innovative").
Hill said other senators were swayed to join the opposition after the hearing.(See "Testifiers Blast EDC Decision ").
Russell said Tuesday night that he was against the tax breaks even before the hearing testimony, but he had just not been public about it. He said, "You can't give them tax breaks just because they make a presentation. Every business can make a presentation. Should every business get a tax break?"
Hill said he was not sure if the official proposal had reached the governor's office yet "but we wanted to make sure we were in time." Information concerning the proposal's status was not immediately available at the governor's office on Tuesday.
Hill wrote in his letter that the senators did not believe there were any "reasonable circumstances" why a company that is a monopoly and guaranteed a profit should be granted tax breaks. He further wrote, "Innovative Telephone is a private concern that has considerable resources at its disposal to plan and to cover the financing of any capital improvements it may entertain."
The major concern, according to Hill, is the loss of revenue to the government by granting the tax break to Innovative.
On the Senate floor during a Legislature's Committee on Health, Hospitals and Human Services hearing on the Department of Human Services, Hill said the governor should veto the tax breaks and give the revenue to the Department of Human Services or other government agencies that need it.
Besides the money, senators are also expressing concern about the fact that the vote to approve the tax breaks for Innovative was done in a secret session of the EDC and that Turnbull might have been trying to influence the vote. EDC member Louis Willis, Internal Revenue Bureau Director, told the Senate that he had a phone call from Turnbull before the meeting, and the governor told him to vote the "right way."
Russell called this remark "very problematic."
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