Senate to consider revamped STARS Act
Published: August 13, 2014
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Take two - that is what senators will be doing today when they consider the Sustainable Tourism through Art-based Revenue Streams Act, known as the STARS Act.
The Senate passed the first STARS Act in February 2012, but it has not been implemented or used by a single production.
Gov. John deJongh Jr. submitted legislation to revamp the law to make it workable, but his proposal was pre-empted by Sen. Clifford Graham.
Graham's bill will be heard by the Committee on Economic Development, Agriculture and Planning at 10 a.m. today at the Ottley Legislative Hall.
"Production incentives have become common in the film, commercials, video and music production industry and serve as a key element for attracting such productions to the territory," the bill's summary states. "This incentives program follows the general guidelines of other programs in the United States and seeks to make the U.S. Virgin Islands competitive with such other programs."
The new bill would repeal the old STARS Act and replace it with a list of specific incentives and tax breaks.
It creates a new division within the V.I. Economic Development Commission that, along with the Film Office of the V.I. Tourism Department, is responsible for managing applications for tax incentives under program.
Funding for the program and the rebates would be appropriated from the Tourism Revolving Fund at a maximum of 20 percent of the previous year's funding or a minimum of $2.5 million per year.
To qualify for the program, a production must be either a local licensed business or a non-Virgin Islands entity that has obtained a license to do business in the territory.
The bill says the Department of Licensing and Consumer Affairs has 15 days to issue a business license following the application. If the DLCA cannot meet that deadline, they must issue a temporary business license that would be good for 60 days.
The application process for the beneficiaries also is on a fast-tracked course. From the time the application is submitted to the Film Office, they have 10 days to review it and forward it to the Economic Development Authority with a recommendation. The Economic Development Authority has five days to review it and concur with Tourism's decision or reject the applicant.
Then it goes to the governor for final approval. He has 12 days to take action on the application, and if he does not act in that time frame, it automatically gets approved.
The production must spend a minimum of $250,000 for each project and at least 20 percent of employees must be V.I. residents.
Anything filmed in the territory must say so in the credits.
The executive production crew must be willing to talk to local students about the music, film or entertainment industry under the bill.
While the original STARS Act provided for a 90 percent break on Gross Receipts taxes, corporate income taxes and personal income taxes, the incentives in the new bill are different.
A production could receive between 10 and 17 percent employment tax credit depending on what percentage of employees are V.I. residents.
The production would be offered a rebate up to 9 percent on expenditures made in the territory, and the maximum amount eligible for a rebate would be $500,000.
If the production includes a qualified Virgin Islands promotion, it could be eligible for an additional 10 percent rebate on production expenses.
If the production activities are conducted on St. Croix, it also would qualify for an additional 10 percent rebate on expenditures.
A hotel tax waiver also is included in the legislation and varies by the amount of room nights booked.
The proposed legislation allows the tax credits to be transferred if the production is taken over by a new company.
"By tying certain of the credits to local hiring, the legislation ensures that the territory's residents benefit from the use of the credit by non-USVI production companies. The statute also provides for the transferability of certain credits to third parties, which increases the attractiveness of the incentive program," the bill states.
- Contact Aldeth Lewin at 714-9111 or email email@example.com.