Mapp Signs Sin Tax Measures

Gov. Kenneth Mapp signed into law this week the unpopular “sin tax” measures aimed at reducing structural deficits.

The measures are intended to both help the government raise funds to keep government agencies open amid ongoing budget shortfalls and to reassure markets that have downgraded V.I. debt and are not lending to the territory. All three major ratings agencies downgraded the territory’s bonds to “speculative” status, with at least one specifically mentioning concern that Legislature may not have the stomach to increase taxes.

Two of the measures are amended versions of proposals from Gov. Kenneth Mapp that are part of a five-year plan to reduce the territorial government’s structural deficits of more than $100 million a year.

He vetoed a section of the bill, however, which would have denied Economic Development benefits or tax breaks to developers of timeshare properties which had previously been hotels or other multi-use facilities. In a statement, Mapp said the measure would destroy new timeshare development. He also vetoed a section of the bill which sought to impose additional austerity measures on the Executive Branch, saying he believes they would hamper the delivery of vital services and possibly violate the separation of powers doctrine. Those vetoed provisions would have:

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– Prohibited the use of nonessential government vehicles after the end of the work day;

– Mandated a 30 percent reduction in vehicle use;

– Required government cell phones be returned within 30 days;

– Mandated that agencies are to coordinate with entities that have teleconferencing to meet by teleconference instead of paying for members to travel between islands;

– Prohibited government officials from staying overnight in hotels on holidays;

– Limited government fuel use to 10 gallons every two days and mandate users of vehicles to maintain fuel logs and turn them over to Property and Procurement for compilation.

– Mandated the Bureau of Economic Research to analyze the impact of the legislation and produce quarterly reports to the Legislature.

Mapp also vetoed a bill that would have put in place another in a long series of tax amnesties; mandate the Economic Development Authority and Department of Planning and Natural Resources create an “expedited application process” for EDA tax breaks and building permits; mandate the Division of Licensing and Consumer Affairs issue first-time business licenses in 30 days or less.

In explaining his veto, Mapp said it places undue burdens on DPNR and DLCA, which would be required to act on certain applications within a limited time period. The agencies would not have sufficient time to ensure compliance with requirements of law, he stated.

The bill also would have removed the governor from the application process for Economic Development benefits. Mapp said current law requires the governor to explain in detail any disapproval of benefits. He cautioned the Legislature against removing him from the process, or risk signaling to beneficiaries that they need not comply fully with the benefit contracts they execute.

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