At this year’s revenue estimating conference, Internal Revenue Bureau Director Joel Lee projected a 10 percent bump in V.I. tax revenues for Fiscal Year 2020, but Gov. Albert Bryan is warning against using up the hoped-for increase wastefully, when the money is not in our pocket and the territory still faces serious financial stress.
Internal Revenue Bureau Director Joel Lee projected Fiscal Year 2020 tax revenues of $823.3 million; about 10.3 percent more than the FY 2019 projected final tax revenues of $746.3 million.
This bump, fed by rebuilding after the 2017 storms, might have been larger if not for two factors pushing down revenues: the 14 percent corporate tax cut passed by the Republican Congress in 2017 and the loss of Virgin Islands excise tax collection, which was halted by the U.S. District Court pending the outcome of a lawsuit filed in 2018. A U.S. District Court ruling held the tax to be an unconstitutional interference with the U.S. Constitution’s Commerce Clause, interfering with interstate commerce. The ruling is pending appeal.
“At the end of the day, we were able to collect $784 million compared to $683 million for the fiscal year, despite not having the Excise Tax, despite the Trump tax cut, which really took a hit to the corporate income tax percentage,” Lee said at the estimating conference.
The conference was created by the Legislature in 2013, over the veto of then-Gov. John deJongh Jr. It mandates members of the governor’s financial team, outside experts and members of the Legislature meet to get an in-depth look at revenue projections.
In his estimate for tax revenues for FY 2020, Lee said he factored in estimated losses from the corporate and excise tax collections, saying the territory losses from not having the Excise Tax were $44 million in FY 2019.
But Lee said his FY 2020 projection is a conservative estimate, and projections of other agencies were not included in his revenue estimate.
“Guess what, when those numbers and that activity hits the economy, I’m predicting that’s going to send this number pretty high upwards,” Lee said.
In a statement, Bryan said a positive outlook for an increase in revenue does not mean the government should go on a spending spree but instead should continue using its revenue to pay down the government’s legacy debts.
“This is going to be one of the brightest revenue projections that we’ve had in a long time,” Bryan said. “We’re up 40 percent on our gross receipts (tax). Collections are way up on personal income tax. We’re doing really well in terms of revenue. Things look really good.”
But he said, “We need to restrain ourselves from thinking we’re all over the hump. We need to be conservative in terms of our spending going forward.”
“I told my financial team to look at austerity measures. Just because we have revenue coming in doesn’t mean we have to go hog wild in terms of what we do.”
The real concern is there are so many things that have been neglected over the years that no one is paying attention to, Bryan said, pointing to the lack of social services and having enough people to connect with residents who are in crisis in the territory.
“These are things that we need to put in place, and all those things cost money (and) we need to address those things before we tear off looking for new things to occupy,” he said.
According to Government House, Tourism Commissioner Joseph Boschulte addressed the high cost of traveling to the territory and said the plan is to push for increased airlift, which will increase competition.
“The reality of it is the USVI is viewed as a high market in terms of travelers, in terms of who comes in regards to income. The market is a supply and demand market, which means they’ll charge what they can bear, and our priority has been to increase airlift directly,” Boschulte said. “We continue to have conversations with Spirit to increase airlift, which is a balance against the major airlines, like American, Delta, and United.”
“We’ve had some conversations, we expect to have a route from Southwest, another discount airline. They fly to San Juan right now, they fly to Jamaica,” he said. “The priority for the first nine months of this year and right now was to increase airlift first and then start to manage how we’re going to deal with the cost across the region.”
Original Source: https://stjohnsource.com/2019/12/02/v-i-revenues-expected-to-increase-bryan-cautions-against-excess-spending/