St. Thomas 𑁋 Senator Donna Frett-Gregory has revisited her stance on the territory’s Earned Income & Child Tax as officials in the territory fight to reduce the financial damage to the local economy in light of the global pandemic caused by the coronavirus, also known as Covid-19.
Frett-Gregory is calling on Governor Albert Bryan Jr. and Congresswoman Stacey Plaskett, the delegate representing the U.S. Virgin Islands in Congress to put pressure on the federal government. Particularly pressure that could lead the territory to qualify for tax subsidies as the nation sinks deeper into a financial crisis. “Just imagine if the territory was to receive tax subsidies, the debt would be significantly lower and the government’s ability to operate would not be such a challenge,” Frett-Gregory said.
She explains that federal subsidies to the territory’s Earned Income and Child Tax would relieve the local government from a heavy tax burden, allowing the executive branch to issue timely tax refunds in the future. The move would save the local government millions in funding that could now be used to address critical needs. She also believes that a federal tax subsidy could help to stabilize the local economy as it takes a beating from the coronavirus.
In March of 2019, Frett-Gregory helped to successfully pass Resolution No. 1850, which petitions Congress to provide the subsidies and called this week on the Bryan-Roach administration to double-down on the measure. “Earlier this week, several media outlets shared information regarding movement in the U.S. House of Representatives on a measure to provide reimbursement to the Government of the United States Virgin Islands [and other territories as applicable] for money the local government disburses for the Earned Income Tax Credit and the Child Tax Credit,” Plaskett said in a December release. “Because our office has received questions regarding the taxes and the bill’s implication to the V.I., we thought it necessary to provide some background and information on the potential outcome.”
In a statement released on Monday, Frett-Gregory’s office said it needed Plaskett “to turn up the heat on the federal government” as House Democrats unvelied a historic $2.5 trillion coronavirus stimulus bill to jumpstart the nation’s economy. “There is no better time than now for our public officials to continue the fight,” Frett-Gregory said in a written statement.
“I was particularly excited when Senator Donna Frett-Gregory approached me in March 2019 about the need for the tax reimbursement and her work on the matter,” Plaskett said in December. “The passage of her Resolution 1850 which ‘aims to petition Congress to provide the territory with subsidies that will assist in the payment and reimbursement of Earned Income Tax Credits and Child Tax Credits to residents.” Frett-Gregory is aggressively pushing for the territory’s head-of-state and Congressional representative to make Resolution No. 1850 a defining part of the territory’s federal aid — now that 17 confirmed cases of coronavirus have been identified in the U.S. Virgin Islands.
Congress could potentially take action on tax credit reimbursements in the U.S. territories’ and other tax measures via its coronavirus stimulus package “Untimely tax refunds has been a vexing issue in our territory for years. In the beginning of my term, I proposed Resolution No. 1850 to petition the Federal Government to subsidize Earned Income and Child Tax refunds for Virgin Islands residents,” Frett-Gregory said in November. “The passage of a tax subsidy will provide the VI Government with the financial support needed to begin the process of timelier tax refund payments.”
“With businesses closing and tourism numbers down due to COVID-19, our economy will eventually come to a complete standstill. New revenue streams to support the territory and its citizens would lessen any future impact from this unprecedented crisis,” Frett-Gregory added. “Where there are challenges, we must seek out opportunities.”
Bryan has continued to take heat from residents who are calling for him to close the territory’s ports, particularly the two airports connecting the Virgin Islands to the outside world. However, he does not have the authority to make that call.
Federal laws make it difficult for states and territories to shut down borders without approval because “FAA policy does not permit the closure or restriction of airports that receive federal funds. Any request to restrict or close an airport must be approved by the FAA.” The power sits with the FAA administrator and the President of the United States.
Instead, Bryan has taken steps to restrict the hospitality industry from operating, a move his administration hopes will slow the spread of the coronavirus in local communities. “No hotel, no timeshare or no Airbnb will be allowed to accept any new guests,” Bryan said.
“If you are coming to the Virgin Islands, you will not have anywhere to stay for the next 30 days,” Governor Albert Bryan Jr. said in a press conference. “No hotel, no timeshare or no Airbnb will be allowed to accept any new guests.” Governors around the country have begun taking aggressive measures to safeguard citizens after the federal government fumbled its response to the outbreak and confirmed cases of Covid-19 continue to skyrocket from state to state.
“Since my first swearing in as the Delegate to Congress, I have introduced a bill for the reimbursement of the EITC and CTC in each Congress. In the 116th Congress, on Jan. 9, 2019, I introduced HR 410, the Territorial Economic Growth and Recovery Act of 2019,” Plaskett added. “This bill recognizes the cost to the local government which under its Mirror Tax Code must utilize the federal tax form and thus disburses approximately $20 million annually for the EITC and approximately $7 million annually for the CTC. My bill addresses the need for reimbursement to the territories as well as other tax issues, including Medicaid.”
We are committed to meeting our mandate and adding another $40 million in payouts,” Bryan said in his January State of the Territory Address. “If we are diligent in this effort, we can finally get caught up on tax refunds by the end of this calendar year. And once we have done that, we will make sure we pay the $10 million set-aside for retroactive wages owed to retirees.”
Federal tax subsidies for the U.S. Virgin Islands could also allow the central government to get cash in the hands of taxpayers sooner, another move that could bring some normalcy to the territory’s rapidly stagnating economy. In 2019, the Department of Finance issued 25,227 refund checks totaling approximately $64 million. The central government managed to reduce its spending and has used the extra cash to payout backlogged tax refunds to residents.
“We must chart the course to rightfully receive what belongs to the territory,” Frett-Gregory said. “It’s time the U.S. Virgin Islands receives fair and impartial treatment.”