Senate raises unemployment tax, requires clarity in health care IDs
Published: September 19, 2012
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ST. THOMAS - The V.I. Legislature passed two bills Tuesday, one to increase the unemployment tax on employers and another bill establishing guidelines for advertising and communication by health care professionals.
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 interest owed to the federal government.
The measure also would raise the employer's contribution to the V.I. Unemployment Insurance Trust Fund from 1 percent to 2 percent of wages paid during the calendar year.
The bill spurred passionate debate, with some senators saying that now is not the time to place another burden on the private sector, and others saying the private sector has reaped extra profits by not having to pay into the fund and now it is time to make the fund whole again.
Dowe said about 2,500 people in the territory are currently collecting unemployment benefits, and the fund needs to become solvent for them.
"This is who we're really mashing up," Dowe said.
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 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 million to $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 now accrues interest. The current balance on the loan is $39 million. The interest owed on the amount is 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.
Health care information
The other bill passed by the Senate Tuesday creates regulations for how health care providers advertise their services.
The bill, sponsored by Sen. Sammuel Sanes, 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.
Sanes said he mirrored similar federal legislation in drafting the bill.
- Contact reporter Aldeth Lewin at 714-9111 or email alewin@dailynews.vi.
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