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DEJONGH TAKES ACTION ON PROPERTY TAX LEGISLATION; VARIOUS PROVISIONS OF THE BILL LINE ITEM-VETOED

Governor John P. deJongh, Jr. signed legislation into law today which makes significant changes to the real property tax system in the Virgin Islands. The governor, however, did line-item veto various provisions of the bill as passed by the Legislature which either failed to meet sound tax administration policy or which excessively reduced the amount of tax that would be collected. In exercising his veto power, the governor noted that it was the past "application of unsound tax policy, which caused the Territory to lose control over its real property tax system several years ago." As we are on the brink of retaking control over our real property tax system, to again implement such unsound policies would defeat all of the hard work undertaken by the Government to correct the earlier deficiencies in our tax administration."

Additionally deJongh expressed in a letter to Senate President Usie Richards, his concerns that the bill as amended and passed by the Legislature cut anticipated revenues to a level that was "too great a variance for us to absorb and still maintain governmental services."

The 2008 budget as passed by the Senate originally called for the issuance of two property tax bills in one year and the estimated collection of $123 million in tax revenue. However, the Senate version of the property tax bill permits only one tax bill. This, coupled with the timing of the Legislature’s approval of the bill and its further adjusting the tax exemption categories, has resulted in a projection that only $50 million will be collected.

DeJongh said the next step is the issuance and collection of real property taxes that are necessary to maintain government services. "I am appreciative that the Legislature has taken this crucial step to allow the Government to move forward towards its aim of reclaiming complete control of its real property tax system and revising the system based on sound tax policies," deJongh wrote, adding, "With the Legislature’s final action on this matter, we now need to take the last step to complete this journey and begin the issuance and collection of the real property taxes that are necessary to the provision of the services the Government provides."

Lastly, the governor acknowledged that the District Court case which required the modernization of the Virgin Islands Real Property Tax System is still pending. Accordingly, he has instructed the government’s lawyers to file all appropriate motions necessary to expedite the lifting of the court’s injunction on the issuance of real property tax bills at the earliest possible date so that the bills can be issued, the taxes collected, and the disruption of both government services and payroll avoided.

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