USVI Advised To Increase Tax Revenues
by Mike Godfrey, Lowtax.net, New York
29 January, 2014
The Director of the US Virgin Islands' (USVI) Office of Management and Budget, Debra Gottlieb, and Finance Commissioner Angel Dawson, pointed out in a teleconference with news reporters that legislative action is needed to either raise tax revenue or cut costs in order to tackle the more than USD70m budget deficit. Otherwise the government will be forced to cut allotments to avoid a cash-flow crisis in August and September, the last two months of the current fiscal year.
Members of the government's Financial Team said on January 23, 2014 that the USVI's projected deficit has increased to nearly USD70.5m as of the end of the first quarter of Fiscal Year 2014. The increase is due to reduced revenues and inaction on revenue enhancing measures proposed to the Senate in the annual budget presentation last June.
The government's revenues from taxes and other sources totaled USD107.7m in the first quarter of FY2014, an 11 percent decline from a year earlier, Gottlieb noted.
Gottlieb and Bureau of Internal Revenue (BIR) Director Claudette Watson-Anderson, who was also present at the conference, responded to accusations from some lawmakers that the BIR has not been doing enough to collect taxes. "The bureau has always gone after delinquent accounts receivable," Watson-Anderson said. She stated that the government collects about 90 percent of the revenues due each year and the IRB has been successful in its efforts to chase up delinquent taxes. "Those efforts have brought in significant dollars over the past year. Every year the amount we collect from delinquent taxpayers increases. The tax collections task force is making contact with delinquent taxpayers and many are entering into agreements to pay the amounts owed. However, despite our best collection efforts, there will not be sufficient additional delinquent collections this year to fix the territory's budget."
Watson-Anderson also dismissed suggestions that USD20m in hotel taxes remains uncollected, saying that analysis has proved the figure to be inaccurate.
At the end of the conference Gottlieb outlined a number of proposed tax measures in her budget overview, which was submitted with the FY14 budget last June. The measures include:
- an income tax surcharge, which would increase revenue by an estimated USD24m;
- a vehicle mileage tax, which would raise up to USD10m;
- a reduction in the gross receipts tax exemption to the previous level, which would yield up to USD3m;
- elimination of excise tax exemptions for certain products;
- an increase in real property and other existing taxes
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