In late March, members of the 29th Legislature, by an eight to seven vote, supported an amendment in the nature of a substitute bill which changed certain items in a controversial measure sent down by Governor John deJongh to make up the central government’s projected budget shortfall of $75 million by October 1 and $131.5 million in fiscal year 2012.
The legislation, Bill No. 29-0045, included eliminating two paid government holidays, making them unpaid days; laying off 300 part-time and per diem employees; and increasing the gross receipts tax for businesses territory-wide by 0.5 percent.
The measure also granted government supervisors the authority to cut workers’ salaries, provided they don’t go below $20,000, required by law.
Policy makers met outside of the legislative session and went into a Committee of the Whole to take testimony from the governor’s financial team, union representatives and religious organizations on the measure.
Members of the body understood the measure sent down by the governor was proposed because the government needed an immediate infusion of $75 million into the central government’s bank account, explained Senate President Ronald Russell.
Luis Morales, president of the United Steelworkers, proposed other cost saving measures which would help generate more revenues such as a six tax on cigarettes, cigars and other tobacco products, and issue a proposal to amend future EDC beneficiaries after 10 years to reduce the benefits from 100 percent to 75 percent.
In Committee of the Whole, both the St. Thomas/St. John and St. Croix Chambers of Commerce strongly opposed the gross receipts tax increase of 0.5 percent.
“This two year increase is necessary to generate additional funds,” said Nathan Simmonds, chair of the governor’s financial team.
The current gross receipt rate was implemented in 1986 and has not been increased in 25 years. The hike is expected to generate about $34 million per year, according financial experts.
President of the St. Thomas/St. John Chamber of Commerce Richard Berry, however, urged the senate to not approve the tax hike.
“The proposed increase will force businesses to close their doors if this increase is approved,” said Berry.
He strongly suggested that the government collect gross receipt taxes from all businesses and not penalize those that pay their taxes.