Oct. 21, 2005 Meetings held with U.S. politicians to propose amendments to the American Jobs Creation Act have "gone well," according to Lt. Gov. Vargrave Richards.
Richards, who spoke at a Board of Realtors meeting Friday, said because of this, the V.I. Government is "cautiously optimistic" that the Economic Development Commissions tax incentive program will stay alive in the territory.
The Act, passed by Congress in 2004 to keep individuals from taking advantage of the EDC system, modifies federal tax rules that apply to U.S possessions like the Virgin Islands. Provisions in the bill regulate residency and source of income requirements for EDC beneficiaries. Richards said this has recently causing many businesses to leave the territory and put a strain on the economy.
One provision stipulates an EDC beneficiary must reside in the territory for a period of 183 days in order to receive benefits. Richards said this is problematic for the V.I. as many businesses in the program have outlets all over the world, and have representatives traveling to oversee operations on a regular basis. While this does keep them from remaining in the territory for a long period of time, it does generate quite a bit of revenue for the V.I. revenue which Richards said would be lost if the provision remains in the bill.
Richards said the government is lobbying for Congress and the U.S Treasury Department to approve changing the requirement to an average of 122 days a year over a three-year period of time. Richards, who recently spearheaded a trip for local public and private sector employees to meet with representatives from these agencies, said he also asked for the requirement to apply only to non-residents of the V.I.
Another provision causing problems for the territory, Richards said, is one relating to source of income, which casts doubt upon whether revenues generated by U.S. companies who have offices in the V.I. and are receiving EDC benefits can be counted as local revenues.
"This part of the bill is very ambiguous and needs to be clarified," Richards said. "So we also lobbied for Treasury to tweak the bill a bit, to decide exactly what source income is."
EDC beneficiary Kevin Brandt, Kevin Callwood, and Cornell Williams, who accompanied Richards on the trip, were also present at the Board of Realtors meeting, and spoke about the national reaction to these demands.
"We did meet with members of the Senates Finance Committee, and told them exactly how the V.I. benefited from this program," Brandt said. "And I think the meetings were fruitful; we impressed upon them the importance of the program to us, and I think they understood."
Brandt added the delegation told U.S senators the program has contributed to the territory not only in terms of investment, but in terms of the amount of jobs it has created within the local economy.
"It was refreshing to see these senators, the members of the Treasury, start to look at things our way after refusing to back down for so long," Brandt said.
Richards told the Board of Realtors Friday the government would continue meeting with national representatives until the provisions have been changed, or a compromise is on the table.
Among the many businesses that will be affected by the act in territory is the Yacht Haven Marina, Sheri Wilson-Gray, executive vice president of marketing for Island Global Yachting, said at the Fridays meeting. Wilson-Gray, who was also invited to speak to Realtors about progress being made on the marina, added that she hoped changes being lobbied for by the V.I. Government will be made, since many businesses that will be opening at Yacht Haven may seek to become EDC beneficiaries.
"One of the many draws of operating a business in the V.I. is the tax breaks," Wilson-Gray said after the meeting. "If its tax free, its where the businesses want to be."
The new marina, whos trademark name will be the Yacht Haven Grande, will bring in many new retail shops to the territory, Wilson-Gray said. She added that the shops will be a blend of what locals and tourists want to see at the marina, combining the crafts of the islands with the brand-names of the mainland.
"St. Thomas has the reputation of being a shopping Mecca," Wilson-Gray said. "And we want to attract new merchants; bring new products here as well."
In addition to the shops and the world class marina the Yacht Haven Grande will also have office space for rent, as well as 12 three-bedroom condominiums, which will open on the market for $2 million each.
With 200-square feet worth of space, the condos will have over-sized balconies, gourmet kitchens, and sauna facilities.
"We want to market the unique lifestyle of living in the islands," Wilson-Gray said. "This is what makes the Yacht Haven Grande a one-of-a-kind leisure complex, one of the best in the world."
Alongside these other facilities, four new restaurants designed to bring ambiance and entertainment to the leisure complex will also be opening, Wilson-Gray said.
"Wonderful things can happen with a glass of wine and some shopping," she said.
Phase one of the development the marina is scheduled to open in Winter 2006. Wilson-Gray said all retailers opening at the marina should be in place next year as well.
Once the marina is complete, Wilson-Gray said Phase II of the project the condos will start construction.
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