The coming of the International Private Bank recently to St. Croix was an economic boomlet for the town of Christiansted, and senators expressed hope that by clarifying Economic Development Authority’s regulations they can bring in half a dozen more entities just like it.
Wednesday, the Committee on Finance gave a favorable recommendation to a bill simplifying hiring requirements for what the government is calling international financial service entities.
Presently, the regulations require for such an entity to qualify for government tax breaks to hire an additional employee for each additional million dollars it adds to its annual income.
Erika Kellerhals, a partner at Kellerhals Ferguson Kroblin, where she specializes in taxes, testified to the committee she has represented more 75 companies seeking tax incentives in the territory. She said half a dozen financial institutions balked at moving to the territory after learning of that requirement.
She then listed what she saw wrong with the requirement.
– It creates an impractical and unworkable employment regime. Impractical in that it requires companies to hire more people than it would likely need to run its operations.
– Disregards the fact that most companies’ income rises and falls and does not stay level year after year.
– Doesn’t make allowances for when a company’s income decreases by $1 million.
– Practicality of enforcing the requirement. Most companies do not complete their financials until March of the following year.
– Will a company be required to file a waiver request if it does not need or cannot find an employee or employees?
Sen. Novelle Francis broadened the discussion by asking Wayne Biggs, the EDA’s assistant chief executive officer, about the health of the authority. Biggs said the authority was healthy with 70 companies under its umbrella now. He added the latest report covering the years 2013 through 2015 showed companies under the Economic Development Commission has generated $1.1 billion in wages and salaries those years and $9.6 million in charitable contributions.
Sen. Donna Frett-Gregory said she was concerned donations designated for public education were going to institutions other than the public schools.
International Private Bank’s agreement with the authority has not been executed yet. Its building on Kings Street in Christiansted, reportedly, cost $5 million dollars and more 20 people are employed there. According to Sen. Kurt Vialet the average salary there is well over $50,000 per year.
Sen. Allison DeGazon said the authority needs to ensure that residents hired by companies getting tax incentives receive adequate salaries.
The regulations would require a minimum of five employees and the authority could require more through negotiations. Eighty percent of the employees must have lived in the Virgin Islands for at least a year.
The committee also moved forward with a favorable recommendation a lease request from Caledonia Communication Corporation for a building at 24C Estate Recovery Hill, St. Croix.
Attending the hearing were Sens. Alicia Barnes, Marvin Blyden, DeGazon, Francis, Frett-Gregory, Oakland Benta, Kenneth Gittens, Janelle Sarauw and Vialet.