The St. Croix Chamber of Commerce is urging lawmakers to vote against a proposed online tax bill, insisting the measure would hamper access to goods and increase the cost of doing business in the territory.
Bill 33-0330 seeks to impose a 2% gross receipts tax on companies that are not physically located in the territory — such as Amazon and Wayfair — but do business in the Virgin Islands through digital means.
Senate President Novelle Francis Jr., who is expected to introduce the bill in an upcoming hearing, said capturing these additional taxes would enable the territory to generate revenue for critical services and programs, including the Government Employees’ Retirement System.
The St. Croix Chamber of Commerce, however, pushed back in a statement Thursday, arguing the bill would likely hike the cost of all shipped goods, including food, clothing and auto parts. The bill would also raise the costs associated with everyday online service providers like Netflix and Amazon, discouraging investment and relocation to the territory, according to the Chamber.
”Given our size and population, the territory simply does not have all the goods and supplies that consumers and businesses need in order to avoid utilizing online retailers,” said St Croix Chamber Chairman of the Board Ryan Nelthropp. The Chamber described a newly opened business on St. Croix that had to acquire 75% of materials and equipment needed to build from out of the territory.
“Had they not been able to ship those items here, there would be no new business adding to the U.S. Virgin Islands’ tax base,” the statement read. “The bill is a job-killer, plain and simple.”
The Chamber further said adding a gross receipts tax on top of the shipping rates and federal excises taxes associated with certain shipping options would be the “death knell” for online retailers.
“Put simply, online sellers will likely determine that the new burdens outweigh the value of Virgin Islands sales and will simply not ship to the Virgin Islands,” the statement read.
“The St. Croix Chamber of Commerce Board of Directors and its membership feel the bill is fiscally short-sighted and will cause undue stress to consumers and business owners in an already economically challenged territory,” the statement continued.
Gov. Albert Bryan Jr. recently expressed support of the measure as one of three solutions to saving GERS, the others being his Cannabis Use Act and a second Internal Revenue Matching Fund debt refinancing deal before the end of December.
Both initiatives intend to remit funds to GERS, which continues to barrel toward insolvency in less than three years.