Update: Citing the concerns of his constituents, Senator Novelle E. Francis has withdrawn Amendment No. 33-913 to Bill No. 33-0330 from consideration as of Friday, November 20, 2020.
Nov 19, 2020 – The St. Croix Chamber of Commerce strongly opposes Amendment No. 33-913 to Bill No. 33-0330. (the “online tax bill”). The amendment purports to impose a gross receipts tax on out-of-territory business which provide goods or services to Virgin Islands residents. Because the bill would drastically raise the cost of doing business in the Territory and disincentivize out-of-territory businesses shipping to the islands, all Senators should vote against the bill. If the bill passes, the Governor should veto it.
The online tax bill would significantly raise the cost of doing business in the Territory by further hiking the cost of all shipped goods, including food, clothing, and auto parts. The bill would also raise the cost associated with everyday online service providers like Netflix, Amazon, and the Wall Street Journal. This discourages investment and relocation to the Territory.
States St Croix Chamber Chairman of the Board, Ryan Nelthropp, “Given our size and population, the Territory simply does not have all the goods and supplies that consumers and businesses need in order to avoid utilizing online retailers.”
The proposed amendments to this bill would further hamper access to goods and equipment and subsequently increase the cost of doing business in the US Virgin Islands, once again. One newly opened small business shared that approximately 75% of the materials and equipment they needed to build their establishment was not available on St. Croix. Had they not been able to ship those items here, there would be no new business adding to the US Virgin Islands’ tax base. Additionally, most goods currently purchased by Virgin Islanders are not sold anywhere in the Territory. Therefore, there will be a marginal (if any) increase in spending at local businesses. The bill is a job-killer, plain and simple.
Virgin Islands consumers and local businesses already face challenges with shipping goods to the islands because many retailers refuse to ship directly to the Territory. Many of those retailers who do ship to the USVI only offer shipping via UPS or FedEx. This is cost-prohibitive given that these shippers charge international shipping rates. Those consumers and businesses in the Territory who choose to ship via freight forwarders are saddled with Federal Excise Taxes. Adding a Gross Receipts tax on top of the complications already involved would be the death knell for online retailers, particularly smaller retailers who are willing to ship to the Territory. Put simply, online sellers will likely determine that the new burdens outweigh the value of USVI sales and will simply not ship to the islands.
The St Croix Chamber of Commerce Board of Directors, and its Membership, feel the bill is fiscally short-sighted and will cause undue stress to consumers and business owners in an already economically challenged Territory. Imposition of this tax and the subsequent requirements to register licenses would effectively cut off US Virgin Islands consumers and local businesses from necessary goods and services not available in the Territory.
At best, it would dramatically increase costs to Virgin Islands consumers as businesses affected by this tax would either pass these increased costs on to the consumer in the US Virgin Islands or cease to do business in the Territory altogether. Either way, it is the consumers and local businesses here in the islands who lose.