A bill that would reduce the tax benefits package given to new Economic Development Commission beneficiaries by 10 percent was held in the Senate Finance Committee for clarifying amendments, but only after extensive discussion on the pros and cons. The bill would expire three years after it is signed, or when the Office of Management and Budget submits a comprehensive tax study.
The bill was one of three discussed at Tuesday’s meeting at the Earle B. Ottley Legislative Hall on St. Thomas.
As the bill is currently written, it would also cut property tax benefits for seniors, veterans, and nonprofit agencies, a situation that several senators said won’t fly with them.
“That’s one of my biggest concerns. It brings up a red flag,” Sen. Sammuel Sanes said, echoing the remarks of others.
However, the bill’s sponsor, Sen. Usie R. Richards, said he’ll offer an amendment to clarify the bill.
The 10 percent reduction in tax benefits to new EDC beneficiaries is intended to increase local government revenues.
“It’s in the spirit of fairness and equity,” Sen. Shawn-Michael Malone said, speaking of how many others in the territory are suffering in the poor economic climate so EDC beneficiaries should bear some of the pain.
Stacey Plaskett, an attorney for the Economic Development Authority, suggested that the 10 percent cut would drive away new applicants to the EDC program, the Enterprise Zone program, and the University of the Virgin Islands Research and Technology Park.
“It does not engender confidence,” she said.
Other locations are upping the ante when it comes to tax benefit packages, and Plaskett pointed out that the territory is targeting the same businesses as those other places.
Sen. Carlton Dowe and other senators took issue with companies getting their EDC benefits renewed numerous times.
“I think the program is abused,” non-committee member Sen. Terrence “Positive” Nelson said.
Malone and Sen. Nereida Rivera-O’Reilly voted no to hold the bill in committee. Sanes, Dowe, Sen. Janette Millin-Young, and Sen. Celestino White voted yes. Sen. Louis P. Hill was absent.
All the senators at the meeting agreed to pass a bill on to the Rules Committee with a favorable recommendation that allows businesses to offset their gross receipts tax liability by what the government owes the business. The bill also would allow property owners to offset their property taxes by any amounts the government owes them. The bill sets a limit for the offset of $200,000 in both cases.
However, Dowe, who chaired the meeting, stressed that this bill does not include the retroactive pay owed to government workers. He put the figure at over $100 million.
“I understand your plight and your hardship; but realistically, there is no way to incorporate the retroactive,” he said.
He later said that including the retroactive in the bill would force the government into bankruptcy.
The Social Security Administration on March 1, 2013, will start using direct electronic bank deposits for its recipients who aren’t already doing so, or issue those without bank accounts debit cards containing the amount of their Social Security benefit. However, all the Finance Committee members at the meeting agreed on a bill that forces banks to cash Social Security checks for people who don’t have accounts with that bank.
At issue is the fact that some people who get either Social Security retirement or disability checks do not have enough money to maintain the minimum balance in their accounts required by the banks. When that happens, fees are usually imposed.
After attorney Claude Walker, who represented the V.I. Bankers Association, said the fee charged was only a few dollars, the bill’s sponsor, Sen. Alvin Williams, lambasted him.
“We’re talking about a few dollars on a $400 Social Security check,” Williams said, adding that the few dollars decreased the already minimal amount of money that a person had for other necessary expenses, such as pharmaceuticals.
Walker said it cost the banks money to cash checks for non-account holders because they had to pay for security for the cash, to transport the cash, and for the tellers to cash the check.
Dowe pointed out that some banks won’t cash Government Employees’ Retirement System checks for non-account holders.
“Everyone should know what GERS means,” Dowe said.
