Rules committee passes bill to raise tax on businesses to pay for unemployment benefits
Published: September 15, 2012
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ST. THOMAS - Members of the Senate Rules and Judiciary Committee passed a bill Friday to increase the tax on employers to help the government pay off the interest owed to the federal government on the millions borrowed to pay unemployment benefits in the territory.
The committee also passed a bill establishing guidelines for advertising and communication by health care professionals and held a bill to regulate telemedicine in the territory.
Unemployment tax
The unemployment tax bill, sponsored by Sen. Carlton Dowe, would implement an annual tax on employers of $25 per employee. The proceeds would go toward paying off the interest owed to the federal government.
The measure also would raise the new employer's contribution to the V.I. Unemployment Insurance Trust Fund from 1 percent to 2 percent of wages paid during the calendar year.
Under the V.I. Code, the employer contribution to the Unemployment Trust Fund is determined by a formula that takes into account many factors.
The law states that no employer's tax rate will be less than zero or more than 6 percent. Dowe's bill changes the minimum to 1½ percent.
Money from the fund can be used only to pay unemployment benefits. The V.I. Labor Department is the custodian of the fund, which technically belongs to the territory's employers.
In 2001, the V.I. Legislature voted to reduce the minimum tax rate to zero and the new employer rate to 1½ percent. The same measure eliminated the delinquency rate and a separate surcharge used for training at the Labor Department.
In a Senate Housing and Labor Committee meeting last month, V.I. Labor Commissioner Albert Bryan Jr. said that despite the changes, the fund remained solvent until the recession hit in 2008 and unemployment claims rose by 75 percent. The amount of benefits disbursed almost doubled, going from $6-8 million a year to about $14 million.
The fund ran out of money in 2009, at which point the federal government offered interest-free loans to states and territories to pay unemployment claims. Those loans lasted for two years.
The federal government has continued to lend the territory money to pay unemployment, but the loan has since begun to accrue interest. The current balance on the loan is $39 million. The interest owed on the amount totals about $966,000 and is due this month.
In August, the Senate authorized borrowing $1 million to cover the interest payment.
The proposed $25 per employee tax will offset the interest payment anticipated for the coming year, which will be due September 2013.
Truth in health care
The other bill passed by the Rules Committee on Friday creates regulations for how health care providers advertise their services.
The bill mandates any health care professional wear an identification tag that clearly indicates the type of licenses held. Similarly, the type of licenses held must be displayed clearly in any health care professional's office where patients are treated.
Students or medical residents practicing health care without a license also must wear a name tag identifying them as such.
- Contact reporter Aldeth Lewin at 714-9111 or email alewin@dailynews.vi.
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