Finance Committee debates bill outlining tax breaks for those owed by V.I. government
Published: October 16, 2013
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ST. CROIX - A bill that would require the V.I. Government to offset the tax liabilities of a local resident or business by any amount the V.I. Government owes that person or business stirred up some controversy during a Senate Finance Committee meeting Tuesday.
Sen. Alicia Hansen, the sponsor of the bill, said legislation is just "common sense."
The bill would require the director of the Internal Revenue Bureau to offset the excise tax and Gross Receipts Tax liability of any person or business operating in the territory against any amount of money that the V.I. government owes to that person or business.
Likewise, the legislation would require the Lt. Governor's Office to offset a property owner's property tax liability against any amount of money that the V.I. government owes to that property owner.
Under the legislation, such an offset for an individual or business could not exceed $1.2 million annually.
The testimony boiled down to government officials saying their various agency computer systems can't communicate with each other, while a business man and the St. Croix Hotel and Tourism Association said they think the bill is a good idea.
Ultimately, when discussion wound down, the committee had lost its quorum and no vote was taken on the measure.
Sen. Craig Barshinger agreed that the bill is a common-sense approach.
"It can't be 'One Government' one day and 'Fractured Government' the next day," he said.
Joe Hollins of Tip Top Construction praised the bill, saying it is "forward-looking" for the government.
"This is only fair," he said. "This is common business practice."
He said his company was never paid by the government for some work it did at Woodson Junior High School a few years ago, and now the matter is in litigation.
The St. Croix Hotel & Tourism Association also sent a letter in support of the intent of the bill.
Internal Revenue Bureau Director Claudette Watson-Anderson said the bureau does not support the proposed legislation.
She said implementing "such a broad offset program" would require a different accounting system than the one the Finance Department currently has, and questioned who would be responsible "for the large-scale reconciliation process" to ensure that offset amounts are valid debts of the government.
Monitoring of the program would require additional human and technical resources, she said, and she questioned how the measure would affect collection of Gross Receipts taxes.
"It is the bureau's position that, in light of the current financial environment, this bill should be reconsidered, because the implementation costs far outweigh the benefits," she said.
Ira Mills, Tax Assessor with the Office of Lt. Governor, said that his agency also does not support the legislation.
"The Property Tax Division and most, if not all, government agencies operate on computerized collections systems that is common to that particular agency and does not in any way network with other government agencies," he said. "The territory's existing technical infrastructure would make this process of offsetting a nightmare to administer. It would require that all government agencies be networked on the same computer system, which is not a cost the government can absorb at this time."
Implementation of an offset would cause the government to lose revenue, "especially during times of economic difficulties as we are currently experiencing," Mills said.