Coalition Of St. Thomas Business Leaders To Protest Sin Taxes At Legislature On Wednesday

ST. THOMAS — As the Senate Committee on Fiance prepares to discuss the Mapp administration’s sin tax measure on Wednesday, a broad coalition of community groups, including the St. Thomas Chamber of Commerce, Indian Association, bar and restaurant groups, hotel and timeshare associations, liquor wholesalers, and others will walk over to  the Earl B. Ottley Legislative Hall at around 8:30 a.m. in protest of the measure.

The bill aims to either introduce or raise taxes on rum, beer, tobacco products, sugary drinks, timeshare unit owners and internet purchases.

“We need to send a powerful message to the government that we will not except further tax increases,” reads a message issued by the organizers. “The government needs to cut its wasteful and reckless spending and reform before they burden an already overtaxed private sector with more crippling taxes.”

The Mapp administration continues to insist that the sin tax bill, if passed, would raise revenues and begin the process of ridding the Government of the Virgin Islands of its structural deficit, which this year stands at $110 million. On Saturday, the governor directed all department and agency heads to slash operations by 10 percent; a first step in offsetting the $110 million budget deficit as the bond market remains closed to the territory.

“While I am extremely empathetic about the issues raised by departments/agencies as a result of these required reductions, without the shared contribution and commitment by all branches and instrumentalities of government, our cash position will continue to erode and result in delays of government operations,” Mr. Mapp said.

According to Dept. of Finance Commissioner and Public Finance Authority Director, Valdamier Collens, speaking in a wide-ranging interview with this publication, the GVI could no longer continue business as usual relative to its finances. Serious, consequential steps must be taken, he said.

“It’s not even an assumption anymore, we have to act in a way in which we don’t have access until we demonstrate to ourselves — not to the bond market — that we want to fix our structural deficit. So for starters we know $110 million is out of the budget, and so we have to act accordingly to adjust and revise our budget,” Mr. Collens said.

Mr. Collens said the territory would not even attempt to access the market anytime soon, whether or not the 32nd Legislature passed the governor’s proposed five-year economic recovery sin tax measure. And even if the measure were to become law, both the bond market and the government would wait up to a full year or more before restarting negotiations. The commissioner’s words were a blunt and sobering acknowledgement that the financial collapse was no longer going to happen, but is now in play.

This means, Mr. Collens acknowledged, the furloughing of government employees, cutting back on government services, deep cuts in the budgets of all government departments and agencies, assessing positions within the government and searching for areas where excess and positions could be eliminated.

“We have to show investors that we are willing to look at new revenue enhancement measures, as well as [moderating] our expenditures.  The thing is we have to realign and right-fit our budgets to ensure that this misalignment doesn’t occur — because if you don’t have access, well then you have to fix your budget,” Mr. Collens said.

“If we are able to pass measures that investors will view as we are addressing our structural deficit, that would bode well to the investors, but they’re not going to jump out tomorrow and say, ‘Oh, come back to the market.’ They’re not going to do that,” he added.

Mr. Collens likened the situation to people who lost their homes during the 2008 housing crisis and could not pay their mortgages. A wide swath of them had to foreclose on their homes.

“What that person does, they go through the foreclosure process, deleverage, fix their credit, and that takes a little bit of time. And then once all of that is corrected — which could take three months, six months, a year — that’s when you can say, ‘Okay, now I’m going to apply for a loan because I know the probability of a denial letter is low,” Mr. Collens said. He said the government shouldn’t be doing anything that is going to generate new revenue based on the market’s decision to stop lending to the territory. “We should be doing it to correct the problems that we have and once that’s done, and we feel like we have addressed a material amount of issues, it is at that point that we could then go back and approach the market for, say, capital projects, just to give you an example,” Mr. Collens said.

Asked whether that meant government employee reductions, furloughing, 4-day work weeks, and cutbacks in government services, Mr. Collens said that was “absolutely” what was going to happen.

“A combination of all of what you said is on the table because the issue, and I want to be very clear, the issue is liquidity. Cash. Do you have cash to pay for expenses that are here today, and because we don’t have access to our line of credit, because we can’t go to the bond market and get access to working capital, we’ve got to fix these things and we’ve got to develop a stringent plan,” Mr. Collens said.

The coalition of business leaders has asked that community members as well as business owners and their employees join the protest on Wednesday. “Please join us with your employees that morning to say no more taxes! If they succeed in passing this round of taxes we know it will embolden the Senate and executive branch to go for an increase in gross receipts tax. Let’s stop them now!” reads the message.

Feature Image: St. Thomas Legislature. (Credit: Ernice Gilbert, VIC)