Virgin Islanders could get a break on delinquent property tax bills if a bill passed by the Senate Committee on Finance becomes law. The law would institute a 90-day amnesty period during which all interest and fees on delinquent bills would be waved if those bills were paid in full.
Delbert Hewitt, deputy chief of staff for the lieutenant governor, strongly opposed the measure, characterizing it as an unnecessary giveback to delinquent payers that was unfair to those who had paid on time.
The law would apply to tax bills from 2008-2012. Currently only bills from 2008-2010 are delinquent and there is $3,918,017 of fees and interest connected to those bills.
Hewitt said that since the responsibility for collecting property tax had been reassigned from the Department of Finance to the Office of the Lieutenant Governor in 2008, collections had skyrocketed and delinquent tax payments had climbed from $2.5 million to $17 million annually.
He said the improvement stemmed from government exercising its power to auction off the property of delinquent taxpayers to settle their bills, a practice he claimed had been neglected in the years prior to 2008.
He added that few properties were ever actually sold, however. Merely the threat of an auction was usually enough to make delinquent owners enter into a payment plan with the government in which they would pay their full bill in installments over 12-36 months, he claimed.
Hewitt said that amnesty programs are used by other institutions to collect a portion of bad debt that may otherwise be uncollectable and have to be written off. He argued that, with the auction system, the government was never faced with this prospect and could always collect 100 percent of the property tax it was owed. Therefore any amnesty program would result in lower tax collections over the long run.
Several senators countered this claim by arguing that the government should be more focused on its short-term finances.
“A 90-day amnesty will produce more money, right now, for the government, which is needed at this time, in spite of the fact that it might reduce the projected income for property taxes,” said Sen. Donald Cole.
Cole said it would be more helpful to the budget to receive a surge of payments this year, even if they come at a discount, than to have the full payments trickle in over the next three years.
Sens. Terrence “Positive” Nelson and Kenneth Gittens also characterized the law as a way to help struggling Virgin Islands taxpayers and help them avoid having their property sold at auction, which they felt should be avoided.
Hewitt replied that his office was simply following the law by pursuing payment through the auction system.
It remains uncertain how many people will actually be helped by the amnesty program. No firm estimate was given by proponents or detractors during the testimony.
After the hearing, Hewitt pointed out that the program does not decrease the amount of taxes people owe, it only removes the fees and interest and, in order to participate, individuals would have to pay 100 percent of their past due property tax.
That means that anyone able to take advantage of the amnesty has more than enough money to negotiate a payment plan with his office, which only requires you to pay 25 percent of your taxes upfront.
Hewitt said he feared the program would undercut his office’s ability to collect property taxes in the future as more people delayed payment waiting for a similar amnesty programs to occur again.
“When you do this now, they’re going to expect another one next year,” he said.
The Senate Finance Committee also passed a measure that would make insurance secured through a rental car agency secondary to a driver’s personal insurance. The law would not change how cars are rented in the territory or how insurance is purchased. The goal of the bill is to avoid fights between insurance companies over whose responsibility it is to pay when a rental car is involved in an accident.
Speaking in favor of the bill, Manuel Guitierrez, owner of Centerline Car Rentals, said the bill would primarily “clarify what’s already happening.”
He said that 33 states already have laws making a driver’s personal insurance the primary insurance, and insurance companies operating out of the mainland are used to this arrangement.
However, since this practice is not codified in law within the territory, occasionally a driver’s personal insurance agency contests the claim, leading to a delay in the claim being paid.
Under the proposed law, whenever a driver of a rental car is at fault in an accident, any claims stemming from that accident would first be applied to their private insurance. In instances when that insurance does not cover rental cars or is insufficient, claims would then be handled by the rental agency’s insurance.
Both bills passed unanimously and were forwarded to the Rules and Judiciary Committee.
Voting in favor of both bills were Nelson, Cole, Sens. Judi Buckley, Myron Jackson, Nereida “Nellie” Rivera-O’Reilly, Clarence Payne and Clifford Graham.
