7-cent-per-gallon WAPA tax goes into effect
Published: July 16, 2012
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ST. CROIX - The territory's gasoline tax will double today - a hike that motorists may start to notice in higher prices at the pumps this week.
The 29th Legislature passed the gas tax increase - which raises the tax from 7 cents per gallon to 14 cents per gallon - in April and Gov. John deJongh Jr. signed it into law in May.
The law raises the gasoline tax, eliminates the Customs duty on imported gasoline that is consumed locally and sets up a fund so that the revenues from the tax can be used to purchase new generators for the V.I. Water and Power Authority and to help with the issuance of bonds for WAPA.
When the legislation was being discussed, some senators described the exemption of imported fuel from the 6 percent Customs duty as an effort to offset the direct gasoline tax increase to consumers.
According to information presented at a Senate committee hearing in March, the legislation is intended to protect consumers when the territory's gasoline and diesel fuel no longer come from the HOVENSA refinery, while creating a dedicated revenue stream to back bonds for WAPA.
However, at this point, HOVENSA has agreed to continue to provide fuel for sale to V.I. retailers at its truck loading station on St. Croix until the end of the year while it is negotiating revisions to its concession agreement with the government. It also is supplying fuel to WAPA through the end of the year.
Under the agreement with the government that HOVENSA is currently operating under, the company already has an exemption from paying Customs taxes on imported fuel, said HOVENSA spokesman David Roznowski. That may change during negotiations for the revised agreements, he said.
HOVENSA does collect the gasoline tax for the government when it sells fuel wholesale at its truck-loading station, and will start collecting 14 cents instead of 7 cents per gallon this week.
Although the increase to the gasoline tax is straightforward, Roznowski noted that there are questions surrounding whether and how HOVENSA and those it plans to store petroleum for will pay the import tax.
"Our attorneys are talking to the government attorneys to try to figure out what this actually means," Roznowski said.
The V.I. Internal Revenue Bureau also released a prepared statement last week, advising all gasoline and diesel importers about the fuel tax increase that goes into effect today.
"The fuel tax will be collected at the time of importation into the territory. In St. Thomas, importers must pay the 14 cents tax at the Excise Office in the Nisky Shopping Center before clearing the shipment. In St. Croix, importers must pay the 14 cents tax at Gallows Bay and the Airport," IRB Director Claudette Watson-Anderson said in the release. "Importers are reminded that there is no cash collection at the ports of entry on both islands. Credit cards and checks are accepted for payment of the fuel tax."
The release said that importers will be required to confirm the gallons of gasoline or diesel being imported in order to calculate the tax due, each and every time there is a shipment to be released.
A new tax form has been implemented to assist with this process.
In addition, the monthly fuel tax return has been revised to allow for the up-front payments of the tax to be treated as a credit towards each month's tax liability, the release said.
Fuel tax returns are due 30 days following the close of each month.
Revised forms are available at the excise tax locations and also on the bureau's website at www.viirb.com. Questions concerning the fuel tax increase can be directed to Tamarah Parson-Smalls at 714-9310.