COMMITTEE ON FINANCE 0//0-AMENDED AND REPORTED OUT TO THE FLOOR 0//0-REPORTED OUT TO THE COMMITTEE ON RULES AND THE JUDICIARY 0//0-AMENDED AND REPORTED OUT TO THE COMMITTEE ON RULES AND THE JUDICIARY BILL NO. -000 Thirty-Second Legislature of the Virgin Islands January, 0 An Act amending title, sections and of the Virgin Islands Code to enhance revenues for the Territory of the United States Virgin Islands as a part of the implementation of initiatives set forth in the Government s Five-Year Financial Plan towards attaining fiscal stability and economic growth, and for other purposes, including the establishment of a new timeshare fee, all through enactment of The Virgin Islands Revenue Enhancement and Economic Recovery Act of 0 PROPOSED BY: Senators Neville A. James, Kurt A. Vialet, Nereida Rivera O Reilly and Myron D. Jackson Be it enacted by the Legislature of the Virgin Islands: SECTION. This Act may be cited as The Virgin Islands Revenue Enhancement and Economic Recovery Act of 0. TITLE AMENDMENTS RELATING TO TAXES ON CERTAIN PRODUCTS SECTION. Title Virgin Islands Code, subtitle, chapter, section, subsection (a) is amended by striking all the language in schedule and inserting new language that reads as follows: () Beers of foreign manufacturers of. ounce containers, or the equivalent------ $.0
0 () Beers manufactured in the United States of. ounce containers, or the equivalent --------$.00 () Beers of foreign manufacturers, per reusable keg of. ounces, or the equivalent $. () Beers manufactured in the United States, per reusable keg of. ounces, or the equivalent --------$.0 () Carbonated drinks in reusable canisters-------% () Self-propelled vehicles (excluding motor vehicles requiring licensing for highway use) and apparatuses (excluding airplanes), boats, firearms, ammunition and bicycles-------0% () All boats, including launches, with or without auxiliary engines or outboard engines-----------% () Marine engines (excluding outboard motors) ------% SECTION. Title Virgin Islands Code, subtitle, chapter, subsection (a) is amended in Schedule in the following instances: (a) Paragraph (l) is stricken in its entirety and the remaining paragraphs renumbered; and Paragraph () is amended after % by inserting plus $.00 per carton. SECTION. Title Virgin Islands Code, subtitle, chapter, section, subsection (a) is amended as follows: 0 (a) Schedule VII is amended by striking all the language in that schedule and inserting new language that reads follows: (A) Carbonated Drinks----------- (a) % plus $0. per case of unit- ounce containers, or the equivalent;
(B) plus $. per case added to the value of subparagraph (A), for the Virgin Islands Revenue Enhancement Act. Schedule VIII is amended by striking all the language in that schedule and inserting 0 0 new language that reads: Spirits, Cruzan Rum and Tafia, Diageo Brands, Irish and Scotch Whiskies, Whiskies other than Scotch Whiskies, including Bourbon and Rye, Liqueurs and Cordials, vodka, tequila, vermouth and other wine and fresh grape beverages flavored with plants or aromatic substances, Acquavit, Bitters, Brandy and Cognac, Gin and Geneve, Kirschwasser and Ratafia, Wines, Rums, Scotch, and similar items commonly known as or referred to as distilled spirits-------- 0%. SECTION. Title Virgin Islands Code, subtitle, chapter, section, subsection (e) is amended by striking paragraph (0) in its entirety. SECTION. Sections (a) of this title takes effect on March, 0. TITLE II DELETION OF TIMESHARE ROOM TAX: ESTABLISHMENT OF AN ENVIRONMENTAL/INFASTRUCTURE IMPACT FEE FOR TIMESHARES. SECTION. Title Virgin Islands Code, chapter, section, subsection is amended by striking paragraph () a new paragraph () and paragraph () to read as follows: () The Environmental/ Infrastructure fund is established and applicable to timeshares, for purposes of this section, the term, Environmental/Infrastructure Impact Fee means the new occupancy lodging fee that is levied on timeshare owners users by the Virgin Islands Government per night of occupancy described in paragraph (). () The Environmental/Infrastructure Impact Fee must be assessed, collected, managed, and dispersed in the following manner: (A) Each timeshare unit is assessed an Environmental/Infrastructure Impact Fee of $.00 per day of occupancy.
(B) The timeshare plan manager is responsible for collecting the Environmental/Infrastructure Fee, filing the tax returns and paying the fee, plus any applicable interest or penalties, as required by this section to the V.I. Bureau of Internal Revenue. The timeshare association is responsible for any and all assessments or liens. (C) The Timeshare plan manager shall prepare and maintain the Environmental/Infrastructure Fee worksheet and shall produce it upon request by the V.I. Bureau of Internal Revenue or the Internal Revenue Service. (D) % of the Environmental/Infrastructure Impact Fee revenue collected 0 pursuant to this section must be allocated to the V.I. Tourism Advertising Revolving Fund. The Department of Tourism shall expand its tourism advertising to foreign countries in order to attract new markets. (E) 0% of the environmental /infrastructure impact fee revenue collected must be allocated to the General Fund. The remaining % to the hospitals to be distributed equally. (F) Any hotel, multi-use facility, or entity receiving Economic Development Commission benefits may not be converted to timeshare activity. Any such conversion results in the immediate loss of all Economic Development Commission benefits and other tax subsidies. (G) The Bureau of Economic Research in collaboration with the Post Audit 0 Division shall conduct a study on the impact of timeshare activities and components in the Virgin Islands within two years of implementation. SECTION. Pursuant to title of this act, all new revenue earned pursuant to the increases in excise taxes described in this act, must be deposited into the General Fund and revenue earned under title II of this act must be used to pay the obligations authorized in section I of this
title, except as may be provided otherwise by the Director of the Office of Management and Budget acting on sound discretion. SECTION. (a) To ensure that the revenue-enhancing mandates prescribed in this act are effective, no later than 0 days after the effective date of this act, the Bureau of Economic Research, the Department of Finance, the Office of Management and Budget and the Post Audit Division of the Legislature shall meet and collaborate to develop an analysis process to ensure that the mandates of this act are met and continue to prove effective in enhancing revenues for the Virgin Islands; and The analysis process must continue every fiscal year thereafter. 0 SECTION. (a) The Department of Finance shall provide the Bureau of Economic Research and the Post Auditor of the Legislature a report of all revenues generated pursuant to this act and expenditures made from the revenue. The information required of the Department of Finance in subsection (a) must be submitted no later than 0 days after the end of the first fiscal quarter after the effective date of this act and each fiscal quarter thereafter. SECTION. (a) The Office of Management and Budget shall assist departments and agencies in developing goals and objectives consistent with this act. The Office of Management and Budget shall submit to the Governor and the 0 Legislature its quarterly report of the progress of all agencies and departments related to all revenues generated by and expenditures made as a result of this act. SECTION. (a) The Bureau of Economic Research shall prepare an analysis of information received from the quarterly reports submitted by the Department of Finance and the Office of Management and Budget.
The findings of the analysis mandated by subsection (a) must include all revenue generated and appropriations made as a result of this act. (c) The report of the Bureau of Economic Research analysis must be submitted to the 0 Post Auditor of the Legislature and the Governor no later than 0 days after the end the first fiscal quarter after the effective date of this act and each fiscal quarter thereafter. SECTION. The Post Auditor of the Legislature shall annually prepare an analysis of the revenue generated by this act and the expenditures made from such revenue compared to revenues generated and expenditures made during the 0 fiscal year. SECTION. No later than 0 days from the enactment of this act, the Office of Management and Budget Grant Oversight and Review Office, in collaboration with the Post Audit Division of the Legislature, shall complete and report to the Legislature the following related to all federal grants received by the Virgin Islands Government: () amounts received; () amounts remaining; () utilization rates; () funds identified as at risk ; () percentage of grant funds used for programs versus administratively; () recommendations for re-programming of funds; and () improvements for the efficient and appropriate use of the funds. 0 SECTION. All Virgin Islands Government agencies, departments, and semi- autonomous agencies implement the following cost-reduction measures as follows: (a) All non-essential government vehicles must be parked upon the completion of the workday. The government agencies, departments, and semi-autonomous entities shall achieve a vehicle reduction usage by 0% by the end calendar year 0. The government agencies,
departments, and semi-autonomous entities must provide a report to the Legislature of the reduction. All government-issued cellular telephones must be returned to the respective commissioner s offices no later than 0 days after enactment of this act. (c) All government agencies, departments, and semi-autonomous entities whose employees must travel for the district or territorial meetings shall instead of traveling, coordinate with those departments/semi-autonomous agencies that have tele/video conference capabilities to utilize their equipment. The government agencies, departments, and semi-autonomous entities shall achieve a 0 percent reduction in their fiscal year travel budgets. 0 (d) (e) There must be no overnight hotel stays on Fridays, or on holidays. All government agencies, departments, and semi-autonomous entities are restricted to attain 0 gallons of fuel, per vehicle for two days. Fuel may not be dispensed more frequently than every two days in the amount of 0 gallons per car. The government agencies, departments, and semi-autonomous entities shall maintain fuel logs and submit a fuel usage and maintenance report to the Department of Property and Procurement. The Department of Property and 0 Procurement shall compile the information to reflect the mandates of this act. SECTION 0. All provisions in title II of this act take effect on March, 0. BILL SUMMARY The bill consists of revenue-enhancing amendments to the Virgin Islands Code to implement a part of the initiatives set forth in Government s Five-Year Financial Plan towards attaining fiscal stability and economic growth. The revenue enhancing measures include two key areas; excise taxes on tobacco products, alcohol beverages and on sugar carbonated beverages, and the establishment of a new timeshare fee. The specific nature of each set of amendments is summarized below.
Title II of this bill enacts new revenue measures with regard to timeshares. Although the Virgin Islands Code establishes a timeshare occupancy tax of 0.%, going forward, the Bureau of Internal Revenue ( BIR ) will assess on and collect from timeshare owners the existing hotel room occupancy tax of.%. Accordingly, Title II of the bill would repeal the timeshare occupancy tax. In addition, the Act establishes a new timeshare fee, the Environmental/Infrastructure Impact Fee, in the amount of $.00 per day of occupancy of any timeshare in the Virgin Islands. The Act also authorizes revenues generated from the 0 0 Environmental/Infrastructure Impact Fee to be allocated as follows: (i) % to the Virgin Islands Tourism Advertising Revolving Fund. (ii) 0% to the General Fund. (iii) % to the Hospitals.. Excise Taxes Title I of the bill provides for the implementation of certain of the planned revenue initiatives outlined in the Government s plan previously submitted to the Legislature. Section significantly amends Title, chapter, section, which establishes the rates and base for certain excise taxes on imported goods. As currently in effect, the statute imposes very low tax rates on most liquor and tobacco products. Imported beers, for example, are taxed at a rate of $.0 (for foreign beers) or $. (for U.S. beers) per case or each twenty-four () bottles Whiskies and other liquors are generally taxed at a rate of just $.00 per case. The purposed increases in the excise tax rates on liquor and tobacco will provide the dual benefits of both increasing revenue and supporting public health. Products on which we apply the new the new excise tax rates will include: Foreign and U.S. beers, from $.0 and $. per case, respectively, to $.0 and $.00; and Cigarettes, from % to % plus $.00 per carton; and
Carbonated beverages, from % plus $0. per case plus $. per case (except those in reusable canisters, which will now be taxed at %); For most spirits and liqueurs from $.00 per case (or $.0 per wine gallon, if greater) to 0% of value; and For wines and brandies, from $.0 per case (or $0. per wine gallon, if greater) to 0% of value. Cumulatively, the proposed excise tax rate increases, are projected to generate approximately $. million in new revenues annually. The effective date of such amendments is March, 0 0 II. Timeshare Fees 0 The bill repeals the timeshare occupancy room tax. Under the current version of Title, chapter, section, hotel guests pay the room tax at a rate of.%. If a time share unit is rented for a period of less than 0 days, the BIR assesses and collects the.% hotel occupancy tax for each day of stay. It must be noted that no revenue has been collected under the provision of the timeshare tax, as there had been no base evaluation on which to effect the tax. Hence, by deleting the timeshare occupancy tax at the rate of 0.% from the statutes, the loss of revenue to the Territory is zero. Section of title II of the bill creates a new timeshare fee, the Environmental/Infrastructure Impact Fee, which shall apply to all timeshare units in the Virgin Islands. There are thousands of timeshare units in the Territory, owned and utilized by over 00,000 persons per year at a reported rate of 0% occupancy of timeshare units currently existing in the Territory. Under current law, there is no financial mechanism, save a real property assessment, for recouping the costs to the Territory of the infrastructure necessary to support the presence of so many welcomed visitors and timeshare owners.
0 0 The bill provides the required source for payment of such costs by imposing an Environmental/Infrastructure Impact Fee of $ on each timeshare unit for each day of occupancy. Assuming an average of 00 days of occupancy per year, the fee is projected to generate approximately $0,000 of new revenues annually for every timeshare apartment unit, not per owner. At approximately occupied units, the estimated revenues from this fee is estimated revenue from this fee is estimated at $ million annually. The revenue from the Environmental/Infrastructure Impact Fee shall be allocated, Twenty-five percent (%) to the Virgin Islands Tourism Advertising Revolving Fund for the express purpose of partnering with the timeshare industry to promote timeshare or vacation club sales in the U.S. Virgin Islands. 0% shall be deposited into the General Fund and the remaining % to the hospitals. Sections three through seven mandate the collaboration of the Department of Finance, the Office of Management and Budget, the Bureau of Economic Research and the Post Auditor of the Legislature implement procedures to analyze and ensure the effectiveness of the economic enhancement measures of the bill in attaining fiscal stability and economic growth of the Territory of the Virgin Islands. The effective date of the timeshare amendments is March, 0. III. Appropriations 0 The Governor estimates Virgin Islands Revenue Enhancement and Economic Recovery Act is estimated to generate, if promptly enacted by the Legislature, approximately $0 million over the next five fiscal years as part of the Plan. BR-0/January 0, 0/ S:\AMENDS\nd Legislature\NEREIDA O'REILLY\- O'Reilly.docx S:\AMENDS\nd Legislature\SAMMUEL SANES\--Sanes-Auesterity measures..docx
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