Members of the U.S. Virgin Islands Senate recently met to discuss a variety of issues, including the financial affairs of the Government of the Virgin Islands. Of particular interest were the opinions of senators on Gov. Kenneth Mapp’s proposed “sin taxes” for the territory.

These taxes would include new levies on cigarettes, alcohol, carbonated sugar beverages and timeshare rentals. They did not get approval from the 31st Legislature, but could pass through the new Legislature this year.

Governor Mapp proposed the taxes to help stimulate the Territory’s economy. In late 2016, the Legislature authorized a sale of $247 million worth of new bonds, but as of December, the Government determined it would not proceed in the bond market due to unfavorable conditions. It attempted to move forward in the bond market again in January, but the government had to call off the transaction after discovering orders for just $127 million in senior lien bonds and $13 million in subordinate lien bonds.

Governor Mapp said this lack of sufficient bonds was due to the Territory’s increased reliance on going into debt to pay off current expenses, along with the federal intervention that recently took place to satisfy Puerto Rico’s debt responsibilities. Because of that, borrowers’ perceptions of the U.S. Virgin Islands’ credit state have been significantly soured, which has led the three major bond rating companies to downgrade the Territory’s debt and increase the costs of borrowing.

A contentious issue

According to one U.S. Virgin Islands senator, however, the bond rating companies have been tougher on the territory because they do not have confidence in the Governor’s five-year tax plan. Senators have also heard some significant concerns from business owners on the potential sin taxes that have been the cause of a great deal of discussion over the last few years since first proposed.

Some senators also accused Government House officials of making the Territory’s financial situation appear worse than it actually is by leaving out potential new revenue sources from its evaluations, including money that would come in through “racinos” to be established on St. Croix and St. Thomas.

Members of the Senate Minority Caucus say there are alternatives to the sin tax proposals the Government could consider. Examples would include cutting back administrative personnel deemed to be unnecessary or redistributing employees within these oversaturated areas in the Government to offices that need more assistance. Some senators have also advocated for the legalization and taxation of recreational marijuana.

Meet with a skilled government relations attorney to learn more about how these issues could impact businesses and organizations in the U.S. Virgin Islands.


Tom Bolt is Managing Attorney and Chair of the Government Relations Practice at BoltNagi, a well-established and respected government relations law firm proudly serving clients throughout the U.S. Virgin Islands.