Internet Companies Win on Taxes, V.I. Loses

Dear Source:
Recently, there was an avalanche of letters in the printed media either rallying for an amendment dubbed as the "Malone Amendment" or opposing it because of the tax exemptions certain corporations would be guaranteed for at least a decade. While the information from both sides of the debate has been enlightening for me, some electorate might have become more confused than ever. Hence, I am compelled to write this letter in hopes that the matter could be better understood.
The controversial amendment has now become a law since the Senate overrode the governor’s veto of it. All fifteen senators supported the override except for Sen. Cole, Sen. Hansen, Sen. Roach and Sen. Young. Those that approved the legislation in essence are saying that an Internet service provider (ISP) may automatically be exempted from paying certain taxes to the V.I. government even if the company is not physically located at the Research & Technology Park (RTPark). There are three ISP companies that have signed contracts which allow them to be tenants of RTPark. With the legislation now in effect, the consultants of these ISP companies could occupy the clouds above a newly constructed building on the St. Croix campus of the University of the Virgin Islands. Really?
How did the adoption of a so-called "technical" amendment become a political issue? I suppose the political storm began the day that the "Malone Amendment" radically changed the language in a previously enacted legislation. It was reported that Sen. Malone introduced an "an amendment that was unanimously approved by the Legislature on April 24 to allow virtual tenants to conduct business at the RTPark." Ironically, Sen. Malone made clarification to a current law but he did not correct the misinformation given by the media. Do all fifteen senators agree that virtual tenants are legal? Not really, but the propagandist that wrote "Thank goodness for the action of the entire Legislature" would have you believe so.
Choice, Innovative and Broadband VI got early Christmas bonuses on June 18, the day that the Legislation overwhelming invalidated the governor’s decision to discontinue the tax breaks to these 3 ISPs. According to a St. Croix senator, our government would only be losing about $2.6 million in tax revenues annually from the three ISP companies that currently do not physically occupy any office space at the RTPark. That’s $26 million in a decade, an amount that would greatly reduce the debt of the territory’s two hospitals. These established companies operate as freeloaders (non-paying tenants) while the rest of us must pay our taxes. Some senators have decided that giving generous tax breaks serves as an incentive to keep these companies from departing to Puerto Rico. Really?
Where in the world can one find a government that is eager to give away tax dollars to rich companies just because they provide paying customers access to the Internet? Apparently, Senate President Shawn Malone and ten of his colleagues think that three particular ISPs deserve a tax break despite the dismal fiscal state of our government. It is no surprise that these companies vehemently advocated for senators to override the governor’s veto. One lobbyist bombarded the media with expensive advertisements. The money spent on these ads must have been worthwhile as he does not have to worry about paying our government tax revenues. Really?
Note that the federal government and our local government invested millions to construct the RTPark. My understanding is that the V.I. government anticipated a return on its investment. However, the three ISP companies mentioned may never be required to pay taxes or have their headquarters be physically located on St. Croix. They got deals that allowed to them to be invisible tenants. Not only this, they will continuously receive tax benefits without any obligation to increase employment of locals. Really?
Despite a legal opinion from the Attorney General that certain companies are not eligible to receive RTPark tax benefits, eleven senators came to the defense of the three affected ISP companies. They vigorously argued that denying them tax benefits would violate their contractural agreements with the RTPark. Neither the public nor Sen. Hansen was convinced that this is the case. Nonetheless, all her colleagues from St. Croix felt the legal opinion was flawed and that all the RTPark contracts are valid. Really?
The name of the park tells the purpose for its existence. Companies that conduct investigations using the latest technology may be eligible to join the park. It is expected that they undertake work on a systemic basis in order to expand knowledge, devise new application and invent methods that could make businesses function more efficiently. Cable companies provide customers opportunities to view educational programs but they do not actually set up labs at the University of the Virgin Islands to explore ways to improve the lives of Virgin Islanders. None of the ISPs in the territory has revolutionized the industry that provides Internet services. Without the park, companies can still sell access to the Internet. This is why Choice, Innovative and VI Broadband can remain physically outside the park. Their buildings where customers pay for services are not on the St. Croix Campus of UVI, yet they were permitted occupancy to the park by signing contracts. Some senators valiantly sought to protect the integrity of these contracts. They wanted to avoid a court battle between our government and the three named ISP companies. Really?
Which St. Croix residents were not shocked when it was revealed that a white supremacist declared that as a child of white parents he is exempted from paying taxes? I guess he can thank eleven senators for granting him such an entitlement. In a letter printed before those senators took action on June 18 in support of RTPark contracts, the white supremacist acknowledged that he was a RTPark tenant. Moreover, he stated "Taking away the ISP tax benefits opens the door for the governor and his cronies at VI Next Generation Network to have a virtual monopoly (a government one) on Internet services …with the help of the three ISP now under attack, the cost of Internet in the territory has decreased and the speed have increased." Really?
By opening the floodgate, how much more monies will our government lose when other companies demand similar sweetheart deals? The reality is that the closure of the Hovensa oil refinery was a huge blow to the economy of St. Croix. It is nice that legislation was passed to ensure the RTPark would be built on St. Croix. Wouldn’t it be equally wonderful if friends of the park pay to maintain it, actually occupy it and help reduce the cost of living in Paradise?
Sincerely,
Verdel L. Petersen, St. Croix

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