Governor DeJongh Signs Gross Receipts Tax Hike From 4.5% To 5% Into Law

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On Wednesday evening, March 7, Governor John deJongh signed a number of bills into law, including one that makes possible the borrowing necessary to stabilize the territory’s economy by raising the Gross Receipts Tax.

In addition to the Gross Receipts measure, which raises the tax half a percentage point and facilitates up to $120 million in borrowing, the governor approved bills supporting small business and economic development in the territory, senior housing and early childhood education.

“The long-awaited adoption of an increase in Gross Receipts taxes from 4.5 percent to 5 percent will provide me an opportunity to engage in substantive negotiations with the relevant banking institutions to determine the next steps forward in handling our urgent fiscal issues,” the governor wrote Senate President Ronald Russell in a letter explaining his actions on the seven bills before him.

DeJongh ratified a Major Coastal Zone permit for Compass Point Marina. The permit will expand the number of boat docks on the east end of St. Thomas and spur economic activity involving yachting and sailing.

The governor also signed a bill establishing a voluntary pre-kindergarten program for 4-year-old children, which is in accordance with his administration’s efforts to promote high quality early childhood education for all Virgin Islands youngsters.

DeJongh has already directed the Virgin Islands Department of Education to assemble an implementation team to make the pre-kindergarten program a reality.

Another bill signed into law authorizes the Virgin Islands government to purchase land for the site of a new senior housing project which, once completed, will allow the territory’s seniors to receive federally funded rent subsidies.

The governor also approved the S.T.A.R.S. Act which provides additional incentives and benefits for film and music production, further diversifying the territory’s economy while enhancing its marketability. While he signed the law, deJongh encouraged the Legislature to work with the Department of Tourism and the Economic

Development Authority to adopt revisions that will make it more effective.

The bill that included the Gross Receipts hike had several other provisions, some of which were item-vetoed because they were flawed in construction or even unconstitutional.

Receiving vetoes were measures to allow private sector employees to participate in the Government Employees Retirement System, which would terminate the pension fund’s exempt status under federal law and threaten its overall solvency; subsidies for services on St. John that were already over-appropriated; and an attempt to halt foreclosures that could have potentially devastating effects on the territory’s banking system.

Some other measures, while well-intentioned, the governor also vetoed because they were either impractical, redundant or poorly conceived.

DeJongh did approve a section of the bill that recognized the Department of Licensing and Consumer Affairs’ role in determining the signs used by tobacco vendors to prevent sales to minors.

“I look forward to working in further conjunction with the 29th Legislature on this path towards an optimistic fiscal outlook,” the governor wrote.