How Could Senator Hill “Go to Bed Feeling Good?”

In today’s Source, I read that the “Senate Considers Tax Exemptions for Bank-like Companies.” This measure is being proposed as something that will bring both jobs and (tax) revenue to the Virgin Islands. The International Banking Entities (IBEs) involved would receive 100 percent exemption from corporate income tax, gross receipts taxes, property taxes, withholding taxes, and most excise taxes. In addition, owners/principals would be entitled to a exemption of between 90 & 95 percent their personal income tax.

In lieu of taxes, these IBEs would be required to hire a minimum of three employees an pay a fee of 1.5 percent for the first million of income and one percent for each additional million. And someone has the audacity to state that this would lead to tens of millions of revenue and 500-1000 jobs.

Well, I did the math. And at the rate expressed in the Source, by those testifying in support of this measure before the Senate, it would take 150-350 businesses between 30 & 70 years to reach that “tens of millions in revenue and 500-1000 jobs!” And, after 20 years of a similar measure in Puerto Rico, there are only 31 registered IBEs, so the chance of having the 150-350 needed to make this proposal worthwhile are quite slim, don’t you think?

But Senator Hill has the audacity to sell this to the people as a measure designed to be of benefit to the Virgin Islands and Virgin Islanders? How Could Senator Hill “go to bed feeling good?”

When more than 2000 people were left unemployed by HOVENSA’s closing; when countless teachers face pay cuts in a community where the cost of living is among the highest in the Nation; when the Superior Court can’t afford to pay salaries and when both the Departments of Labor and Education are laying off employees, how could Senator Hill say he would “go to bed feeling good” if one company came to St. Croix and hired a mere three people? Worse…how can we accept that rationale?

Allen Stanford

This proposal makes entirely NO sense! Seems to me, the only benefit is for the IBE principals and begs the question as to how above-board this whole arrangement is. Because these IBEs would not accept deposits, they would also be exempt from Federal Deposit Insurance Corporation (FDIC) regulation. And yes, removing FDIC regulation also (somewhat) protects Virgin Islanders from an Allen Stanford-type Ponzi scheme, but it also gives IBE principals free reign for what Banco Popular Senior Vice President of Operations for the Virgin Islands Region Oran Bowry fears could lead to money laundering. Is that really the economy we wish to create? Is that really how we hope to rebuild our Territory?

Yes, we may avoid the risk of investors losing money. But what about those who may be employed. When the gig is up and the money changers a tossed out of the Temple, what will become of the “500-1000″ employees? Does it make sense to set ourselves up for such a disaster?

Why do you think it’s possible for Senator Hill to “go to bed feeling good” in this scenario?

Share Your Thoughts!

Category : Economy, Politics and tagged , , , , , , , , .
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  • anitanet

    food for thought, or rhetorical question? appreciate the article.

    • Maybe rhetorical, but I’m open to suggestions. Maybe I’m missing something and in some arena this makes sense? :-/

  • David Johnson

    I testified in favor of this bill. My company EDC company employs 17 people and pays over $6mm in taxes each year. Every new company that comes here has the same potential. The concerns that Banco Popular had about the bill were easily overcome. There were not about money laundering. The revolved around the charitable contributions and job creation. Not about money laundering. If there are legit objections about this bill, let’s hear them. This type of unfounded fear mongering does no good. We need new laws to be enacted to jump start the economy. If every decent idea gets shot down where will we be?

    • I appreciate your comment, David and contribution. This, however, isn’t fear mongering. It’s a legitimate question of the integrity of “good deals” that have been repeatedly presented to the people of the Virgin Islands, which only seem to ultimately benefit government officials and those “Settlers” who come into the Territory for prospecting purposes. We have FAR too many examples of such, to testify to this point.

      I would like for you to explain how you pay over $6 million in taxes when EDC companies receive over 90% reduction in taxes. Don’t get me wrong, I am all for business and tax breaks are a good way to bring business. However, most of the companies that benefit from these bills have no connection, whatsoever, to the Virgin Islands – beyond location. Most of these companies hire very few Virgin Islanders…most of the employees are brought in, with the company (so to speak) and become residents to work with the companies – not people who have lived there for any considerable time. If you are not one of those companies, then I commend you. And, if you are not one of those companies, you are also aware of the truth of this statement – because you, yourself, would be fighting against the poor conduct of your contemporaries – no?

      David, thank you for contributing and engaging the discussion.

  • Judith M. Charles

    I don’t know if the Virgin Islands (of the United States) have a financial services industry as does the Virgin Islands (UK), or if this giveaway would mean the the “bank like companies” would also be exempt from U.S. taxes, but this all sounds like something the Financial Action Task Force, formed after Sept 11th, would be very interested in. They “audit” countries’ financial institutions and gently “suggest” corrections that need to be made to methods of operation in order not to be on their grey or black list. Based on other articles it seems that the U.S.V.I. has not dealt well with anything having to do with “bank like companies” and many people have already been bilked by these phony companies. Wasn’t the last one owned by some guy who preyed on people in churches, black people in particular. This looks like more of the same and seems like people will make out like bandits, both from the legislature and these companies, but no real benefit will come to the actual country and most of the people thereof. Some of your legislators sound intelligent when they speak so I would have to say that this smacks of more of the same, corruption. I am one of the Virgin Islanders, here and abroad, you seek. I was born and raised in St. Thomas, of a Crucian father and Tortolian mother. My father was born before 1917 in the DWI, I’m not sure anymore, after listening to all the radio shows recently on who is or is not a Virgin Islander, if I would be considered a Virgin Islander, but I live happily and confidently with my ancestry right here in Tortola.

    • Thank you for your comment, Judith. There indeed is SO much to be explored with these so-called “deals.” I too am very wary of the corruption that will likely be associated with these. I’m hoping to hear from some of the senators, but that’s likely not to happen. We’ll see. We the people have to be able to keep the government accountable. And, while there’s plenty debate on who is and who isn’t a Virgin Islander here’s how I define us: I’m certain you’ll qualify!