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HomeNewsArchivesSenate Committee Approves Gross Receipts Tax Exemption Despite Concerns

Senate Committee Approves Gross Receipts Tax Exemption Despite Concerns

Aug. 14, 2008 — In a busy, fast-paced hearing Thursday with many testifiers and a dozen votes, the Senate Rules and Judiciary Committee amended, held in committee or moved forward six bills, ranging from an appropriation to pay past-due air conditioning-repair bills to raising the gross receipts tax exemption.
The committee voted forward a bill to grant a tax exemption on the first $9,000 instead of $5,000 of gross receipts each month to individuals and firms whose annual gross receipts are less than $225,000.
"Costs are going up for businesses," said Sen Louis P. Hill, one of the bill's sponsors, though not a member of the committee. "These are hard times and this government must implement some relief to small businesses. We have at times offered incentives to bring companies to the territory, and I support that. But we cannot forget the local businesses there are here. These local businesses are the backbone of any economy."
Several people asked the Legislature not to change the gross receipts tax exemption until completion of an analysis of the bill's effect on bonds secured by the gross receipts tax. They included Gizette Canegata Thomas, director of the V.I. Internal Revenue Bureau; Julito Francis, the V.I. Public Finance Authority's director of finance; and Nathan Simmonds, senior policy advisor to Gov. John deJongh Jr.
"It is not sufficient to simply conclude that a reduction of approximately $3 million out of total gross receipts taxes of $147 million … is such a small reduction that no additional analysis is needed," Simmonds said. "While we must protect our small businesses, we must also be vigilant in protecting our commitments to our investors and our integrity before the capital markets."
Because so much of the territory's bonds are secured against gross receipts tax revenues, Simmonds, Thomas and Francis all said reducing gross receipts tax revenues may hurt the territory's chances of improving its bond rating, which would mean future bonds might have higher interest rates and cost the territory more in the long run. An outside analysis of the bill's affects should be complete by next week, Simmonds said, asking the Senate to hold off on the bill until then.
"We are not saying no," Simmonds said. "We are saying wait on the due diligence and reports."
Passing the bill out of the Rules Committee and on to the full Senate should pose no problem, as the government's report is due out before the next meeting of the full Senate Aug. 22, said Sen. Carlton "Ital" Dowe, the committee chairman.
Voting yes were Dowe and Sens. Carmen Wesselhoft, Celestino White and Alvin Williams. No one voted against. Absent were Sens. Shawn-Michael Malone, Usie Richards and James Weber III.
The committee also moved forward a bill appropriating $450,000 to repair and use the former Alexander I. Wilson Elementary School in Estate La Valle as a small, walk-in police, fire and emergency substation. The goal of the bill is to provide faster police and emergency response to St. Croix's north shore without pulling manpower away from more heavily populated areas of the island.
Voting yes were Dowe, Weber, Wesselhoft, White and Williams. Absent were Malone and Richards.
The senators moved out of committee a bill authorizing the government to trade six acres of land in Sion Hill for six acres in Estate Rattan to serve as a buffer between the nonprofit The Village/Partners in Recovery alcohol and drug rehabilitation center and a neighboring housing development.
Voting yes were Dowe, Wesselhoft, White and Williams. Absent were Malone, Richards and Weber.
Also passed forward was a bill to appropriate $476,006 to pay Central Air Inc. for long-past-due bills on air conditioning repairs at numerous public schools, government agencies, divisions, authorities and governing boards. Voting yes were Dowe, Wesselhoft, White and Williams. Absent were Malone, Richards and Weber.
Two more bills were held in committee. A bill to transfer ownership of land on Little Magens Bay land on St. Thomas to the Magens Bay Authority was held to await resolution of some pending liens against the land. A bill to create the position of director of industrial development within the Economic Development Authority was held pending legal analysis.
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Aug. 14, 2008 -- In a busy, fast-paced hearing Thursday with many testifiers and a dozen votes, the Senate Rules and Judiciary Committee amended, held in committee or moved forward six bills, ranging from an appropriation to pay past-due air conditioning-repair bills to raising the gross receipts tax exemption.
The committee voted forward a bill to grant a tax exemption on the first $9,000 instead of $5,000 of gross receipts each month to individuals and firms whose annual gross receipts are less than $225,000.
"Costs are going up for businesses," said Sen Louis P. Hill, one of the bill's sponsors, though not a member of the committee. "These are hard times and this government must implement some relief to small businesses. We have at times offered incentives to bring companies to the territory, and I support that. But we cannot forget the local businesses there are here. These local businesses are the backbone of any economy."
Several people asked the Legislature not to change the gross receipts tax exemption until completion of an analysis of the bill's effect on bonds secured by the gross receipts tax. They included Gizette Canegata Thomas, director of the V.I. Internal Revenue Bureau; Julito Francis, the V.I. Public Finance Authority's director of finance; and Nathan Simmonds, senior policy advisor to Gov. John deJongh Jr.
"It is not sufficient to simply conclude that a reduction of approximately $3 million out of total gross receipts taxes of $147 million ... is such a small reduction that no additional analysis is needed," Simmonds said. "While we must protect our small businesses, we must also be vigilant in protecting our commitments to our investors and our integrity before the capital markets."
Because so much of the territory's bonds are secured against gross receipts tax revenues, Simmonds, Thomas and Francis all said reducing gross receipts tax revenues may hurt the territory's chances of improving its bond rating, which would mean future bonds might have higher interest rates and cost the territory more in the long run. An outside analysis of the bill's affects should be complete by next week, Simmonds said, asking the Senate to hold off on the bill until then.
"We are not saying no," Simmonds said. "We are saying wait on the due diligence and reports."
Passing the bill out of the Rules Committee and on to the full Senate should pose no problem, as the government's report is due out before the next meeting of the full Senate Aug. 22, said Sen. Carlton "Ital" Dowe, the committee chairman.
Voting yes were Dowe and Sens. Carmen Wesselhoft, Celestino White and Alvin Williams. No one voted against. Absent were Sens. Shawn-Michael Malone, Usie Richards and James Weber III.
The committee also moved forward a bill appropriating $450,000 to repair and use the former Alexander I. Wilson Elementary School in Estate La Valle as a small, walk-in police, fire and emergency substation. The goal of the bill is to provide faster police and emergency response to St. Croix's north shore without pulling manpower away from more heavily populated areas of the island.
Voting yes were Dowe, Weber, Wesselhoft, White and Williams. Absent were Malone and Richards.
The senators moved out of committee a bill authorizing the government to trade six acres of land in Sion Hill for six acres in Estate Rattan to serve as a buffer between the nonprofit The Village/Partners in Recovery alcohol and drug rehabilitation center and a neighboring housing development.
Voting yes were Dowe, Wesselhoft, White and Williams. Absent were Malone, Richards and Weber.
Also passed forward was a bill to appropriate $476,006 to pay Central Air Inc. for long-past-due bills on air conditioning repairs at numerous public schools, government agencies, divisions, authorities and governing boards. Voting yes were Dowe, Wesselhoft, White and Williams. Absent were Malone, Richards and Weber.
Two more bills were held in committee. A bill to transfer ownership of land on Little Magens Bay land on St. Thomas to the Magens Bay Authority was held to await resolution of some pending liens against the land. A bill to create the position of director of industrial development within the Economic Development Authority was held pending legal analysis.
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.