Sales Tax for VI?
My prediction. It was proposed a few years ago, but was voted down in favor of increasing taxes on businesses.
Puerto Rico collects sales tax from cruisers making purchases on the ship while the ship is docked there and until it leaves the PR boundary. So they make money even if people stay on the ship!
There's already a built-in sales tax. The Gross Receipts Tax is 5%, and it's often added multiple times as goods go from wholesaler to retailer to consumer, etc. The Gross Receipts Tax is also evaded by many businesses. The govt could add "enforcement" to their agenda (can you imagine?!). Or better yet, switch to a VAT, which is designed to be self-enforcing, and is charged just once as goods move through the supply chain.
I believe I heard a while back (likely on talk radio) that if a VAT or Sales Tax were implemented to replace the Gross Receipts Tax (GRT), it would need to be 15 - 17% to make up for the multiple levels of GRT.
I'm sure the government would think that a hidden tax is much more palatable for the electorate.
Not intending to disturb the "change is bad" contingent again, but...
Instead of trying to squeeze more out of the current supply chain, why not just introduce an entirely new (for the VI) taxed market and put together a quick "full legalization" bill for recreational marijuana? Grow, sell, and public smoking lounges... each step taxed, revitalized STX farming industry, revitalized tourist industry.
Blah, blah, "bringing bad element to the VI" arguments - it happens already, it's just underground, not taxed at all, and feeds the criminal element with more money and guns. Why not feed the government coffers instead?
A sales tax would likely produce less overall revenue contribution than the Gross Receipts tax since only the end buyer would pay the tax - instead of each business along the chain of sale as it is now - [even with the tax evasion currently].
The Gross Receipts Tax is a very regressive form of taxation and pushes up the cost of goods.
The taxi metering might increase personal income tax collection but would have little effect or be affected by a sales tax.
A sales tax would certainly reduce the cost of some goods as they would only be taxed once at the point of sale.
Main Street would obviously oppose a sales tax as that lack is a very strong selling point for the cruise ship market.
As the gross receipts tax has been leveraged for debt obligations for years to come, the introduction of a sales tax would have to be on top of the existing gross receipts tax (which no one would put up with), or require significant restructuring of the majority of the territories bond obligations - a huge undertaking calling into question a far closer examination of the territories finances.
I'd say chances of a sales tax being introduced are next to none.
If I have to pay a sales tax in the VI then it's definitely time to move stateside. We get little to nothing for the taxes we already do pay.
I hear you. Prices have jumped way up in the last couple of years (not that stateside prices haven't) and another jump will be a serious dent not only to locals but to visitors. Already and for several months now, visitors have been remarking that the deals on liquor are just about non-existent these days when they can buy the same thing at home (including Cruzan rum!) for pretty much the same price they pay here so it's not worth it to schlep back home.
I'm not sure I understand this thread. Isn't "duty free shopping" one of the incentives and one of the key marketing points that bring tourists to USVI? And wouldn't sales tax impact the tourist industry where people and cruise ships would feel compelled to avoid the USVI and go to other locales that are duty free? Or are you saying "sales tax" is different than "duty"? Sorry......I can be thick sometimes but would appreciate some enlightenment on my thoughts.
Yes, duty free is different from sales tax. Duty are fees imposed by Customs for imported goods supposedly to increase their cost so imported goods do not have price advantage over locally produced goods.
Duty free goods are supposed to be a draw in destinations that don't produce anything so they generate revenue from trade. However, the U.S. has been reducing or eliminating duties on many items that are imported into the States, so duty free for Stateside residents traveling outside the U.S. is getting to be less of a bargain. In many countries only visitors qualify for duty exemption. I had to show passport and give ship name and cabin # when purchasing a duty free bag in Grenada.
PR sells duty free at airport and cruise docks, yet they still have a sales tax that applies to other items.
Governments get very creative in creating new taxes and revenue when they are cash strapped.
I live in Denver and can tell you that the legalization of MJ has raised an incredible amount of tax revenue but, there is always more to the argument than just money.
The prices of commercial property have sky rocketed
It's harder to get employees that can actually pass a drug test (I run a bus company and drug testing is mandatory)
No one has stopped to figure out if there is a legal limit for driving
There hasn't been a lot of crime around the MMJ centers but there have been some very suspicious fires at grow facilities. Fires destroy crops and records.
All of that said Colorado collected $65,000,000 in tax revenue