77.7 F
Charlotte Amalie
Thursday, March 28, 2024
HomeNewsArchivesSenate Finance Committee Votes for Tax Break to Small Businesses

Senate Finance Committee Votes for Tax Break to Small Businesses

June 17, 2008 — A bill to increase the monthly gross-receipts tax exemption for businesses pulling in less than $225,000 in annual gross income got the thumbs up from senators Tuesday, and much support from local business owners.
Currently, businesses grossing less than $150,000 annually do not have to pay gross-receipts taxes on the first $5,000 they earn every month. The bill raises the exemption to $9,000, and an amendment added at the end of Tuesday's hearing changes the eligibility cap from $150,000 to $225,000 in annual gross income.
Any drop in gross-receipts tax collections could affect the territory's General Fund revenues and the government's ability to pay off the debt-service requirements on certain bond issues, said government officials who testified during Tuesday's Finance Committee hearing.
"If this bill is passed, it will reduce the amount of gross-receipts tax that is estimated and projected to be collected and deposited into the General Fund for fiscal year 2008 and fiscal year 2009," wrote Debra Gottlieb, director of the Office of Management and Budget, in a statement read during Tuesday's meeting. "At present, FY 2008 revenues vs. appropriations reflect a shortfall. Increasing the gross-receipts tax exemption will increase this shortfall. Furthermore, the FY 2009 executive budget was also balanced based on gross-receipts tax collections utilizing the $5,000 exemption."
It would be "more appropriate" for senators to look at bills that would increase the territory's revenue collections in light of increasing "social and economic" demands, she added.
Senators, however, said the drop could not be considered the "straw that would break the camel's back." If the bill had kept the current $150,000 cap, they said, it would be less than one percent when looking at the amount of revenues needed to sustain the government's annual budget. For the past two years, gross-receipts tax collections have hit $145 million, and are projected to jump to $156 million during FY 2009, according to bill sponsor Sen. Louis P. Hill.
"If we want small businesses to sustain themselves in this economy, then it is absolutely critical that we reduce the tax burden on them," he said.
Business owners agreed, and said that any "measure of relief" would be a help to businesses "struggling to keep their doors open and maintain their payrolls in the face of skyrocketing" electricity, shipping and product costs. Business owners often have to choose between paying bills, they added, and many times don't have enough to cover the gross receipts.
"Grocery stores and restaurants cannot keep their doors open," said Jennifer Berry, owner of Jen's Café and Deli. "… We have suffered the increases in WAPA, fuel, etc., by not paying our gross-receipts tax. Granted, some businesses just don't pay at all, but some like myself opted to keep the power on, and stay open, hoping for a turnover in the economy. I rolled the dice and I didn't win triple sevens. The economy is worse, the tourist dollar is shrinking, and I owe."
Many business owners, such as community activist Jason Budsan, also suggested that senators look into tying the gross-receipts tax, or other parts of the territory's tax structure, to a consumer price index that reflects the costs associated with doing business in the territory. Others suggested eliminating the gross-receipts tax altogether and replacing it with some form of sales tax.
Senators also approved bills:
— appropriating $100,000 from FY 2008 General Fund revenues to the V.I. Police Department, Fire Services and Emergency Medical Services to turn the old Alexander I. Wilson Elementary School on St. Croix into an emergency services substation;
— appropriating about $476,000 to the Department of Property and Procurement to take care of outstanding contracts and payments — some dating back 14 years — to Central Air;
— appropriating $250,000 to the Boys and Girls Clubs of the Virgin Islands for operating expenses and other purposes; and
— shifting $325,000 from one section of the Department of Finance's FY 2008 budget appropriation to cover accounting costs.
A bill to impose a 10-percent impact fee on developments valued at more than $5 million was not approved Tuesday, since motions to approve the bill and to hold it in committee both failed on a tie vote.
Present during Tuesday's meeting were Sens. Liston Davis, Carlton "Ital" Dowe, Juan Figueroa-Serville, Hill, Terrence "Positive" Nelson, Ronald E. Russell, James Weber III and Carmen M. Wesselhoft.
Back Talk Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.

Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.