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Charlotte Amalie
Wednesday, July 6, 2022
HomeNewsArchivesHow to Repair the Flawed Property Tax System

How to Repair the Flawed Property Tax System

Dear Source:
One of the most important issues to the people of the Virgin Islands will be discussed in Congress this week. During the 25th Legislature, I wrote Delegate Christiansen to inform her about the ramifications of Judge Moore's ruling in Berne vs. Government of the Virgin Islands. In that case, the court ruled on striking down the 10% cap on property taxes and other exemptions. The court further went on to rule that the Government of the Virgin Islands must comply with 48 U.S.C. (Sec. 401) which states that all property in the Virgin Islands must be assessed based on actual value for the calendar year 1936 and all succeeding years and that the rate shall be the same for all properties in all municipalities in the islands whether or not such properties are in cultivation and regardless of use.
When my office issued a Press Release on this matter during the 25th Legislature, I received numerous positive responses from attorneys throughout the territory with the exception of one individual. It should be noted however, that the attorney in opposition, represented the commercial property owners on this issue. In my August 6, 2004 letter to Delegate Christiansen, I informed her that based on my research, I was of the opinion that the only way to really help our people was to repeal the 1936 Law in Congress. This was my recommendation to the Delegate in 2004 and I was happy to learn that she is moving in this direction. I have been informed that there will be a hearing on H.R. 59 during the week of October 24-28, 2005.
My recommendation to repeal the 1936 Law in Congress was made because after much research, I found that over 38 states have had the ability to address this same issue, based on information received from the National Council of State Legislatures. Of the 38 states that have had some type of property limit, 19 of them have had the similar 10% cap on property tax that was struck down in Berne vs. Government of the Virgin Islands. Furthermore, constitutional principles have clearly established that the Federal Government shall not involve itself with the various states administration of property taxes. Allowing the local government to develop a comprehensive plan or policy to address the sky rocketing property values is the best approach to this problem. If we do not address this issue, many individuals will lose or have to sell their property immediately. In light of this, I am urging the community to support Delegate Christiansen effort on this issue.
I realize there are individuals who have no respect for this type of authority to be placed in the hands of the local government, so they may opt for the status quo or they will say that the government already has the authority without repealing the 1936 Act. They may even suggest that the Legislature has the authority to change the mileage rate or property tax rate from 1.25% or 60% of the property value. While the above is true, changing the rate does not help residential and private land and homeowners because the 1936 Act specifically emphasizes that all properties must be assessed at true value across the board. This means that a private home and a business being assessed at $100,000 will share the same property tax rate; however, if the business makes over $500,000 a year how can the taxes for both properties be the same. This is what the opponents of the repeal are in favor of; knowing fully that it is not fair. It is not fair because commercial properties are designed to produce income, thus by its very nature can and should pay higher taxes. After all, taxes and other business expenses are quite often passed on to the consumer. In the case of homeowners and owners of the last remaining green spaces here in the territory, whom can they pass the cost on to?
In closing, the Berne case brought to light that our method used for calculating property taxes are flawed. The court ruling has had a serious impact on the whole tax structure and method of taxation in the territory and unless the territory get a grip on this issue, there are going to be instant millionaires with no cash to sustain said properties. I might add that we are not alone on this issue, several years ago California experienced the same problems and they created what is known today as Proposition 13 in order for their people to get some relief. Who's next?

Almando "Rocky"Liburd
St. John Native

Editor's note: We welcome and encourage readers to keep the dialogue going by responding to Source commentary. Letters should be e-mailed with name and place of residence to source@viaccess.net.

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Dear Source:
One of the most important issues to the people of the Virgin Islands will be discussed in Congress this week. During the 25th Legislature, I wrote Delegate Christiansen to inform her about the ramifications of Judge Moore's ruling in Berne vs. Government of the Virgin Islands. In that case, the court ruled on striking down the 10% cap on property taxes and other exemptions. The court further went on to rule that the Government of the Virgin Islands must comply with 48 U.S.C. (Sec. 401) which states that all property in the Virgin Islands must be assessed based on actual value for the calendar year 1936 and all succeeding years and that the rate shall be the same for all properties in all municipalities in the islands whether or not such properties are in cultivation and regardless of use.
When my office issued a Press Release on this matter during the 25th Legislature, I received numerous positive responses from attorneys throughout the territory with the exception of one individual. It should be noted however, that the attorney in opposition, represented the commercial property owners on this issue. In my August 6, 2004 letter to Delegate Christiansen, I informed her that based on my research, I was of the opinion that the only way to really help our people was to repeal the 1936 Law in Congress. This was my recommendation to the Delegate in 2004 and I was happy to learn that she is moving in this direction. I have been informed that there will be a hearing on H.R. 59 during the week of October 24-28, 2005.
My recommendation to repeal the 1936 Law in Congress was made because after much research, I found that over 38 states have had the ability to address this same issue, based on information received from the National Council of State Legislatures. Of the 38 states that have had some type of property limit, 19 of them have had the similar 10% cap on property tax that was struck down in Berne vs. Government of the Virgin Islands. Furthermore, constitutional principles have clearly established that the Federal Government shall not involve itself with the various states administration of property taxes. Allowing the local government to develop a comprehensive plan or policy to address the sky rocketing property values is the best approach to this problem. If we do not address this issue, many individuals will lose or have to sell their property immediately. In light of this, I am urging the community to support Delegate Christiansen effort on this issue.
I realize there are individuals who have no respect for this type of authority to be placed in the hands of the local government, so they may opt for the status quo or they will say that the government already has the authority without repealing the 1936 Act. They may even suggest that the Legislature has the authority to change the mileage rate or property tax rate from 1.25% or 60% of the property value. While the above is true, changing the rate does not help residential and private land and homeowners because the 1936 Act specifically emphasizes that all properties must be assessed at true value across the board. This means that a private home and a business being assessed at $100,000 will share the same property tax rate; however, if the business makes over $500,000 a year how can the taxes for both properties be the same. This is what the opponents of the repeal are in favor of; knowing fully that it is not fair. It is not fair because commercial properties are designed to produce income, thus by its very nature can and should pay higher taxes. After all, taxes and other business expenses are quite often passed on to the consumer. In the case of homeowners and owners of the last remaining green spaces here in the territory, whom can they pass the cost on to?
In closing, the Berne case brought to light that our method used for calculating property taxes are flawed. The court ruling has had a serious impact on the whole tax structure and method of taxation in the territory and unless the territory get a grip on this issue, there are going to be instant millionaires with no cash to sustain said properties. I might add that we are not alone on this issue, several years ago California experienced the same problems and they created what is known today as Proposition 13 in order for their people to get some relief. Who's next?

Almando "Rocky"Liburd
St. John Native

Editor's note: We welcome and encourage readers to keep the dialogue going by responding to Source commentary. Letters should be e-mailed with name and place of residence to source@viaccess.net.