Decline in Timeshare Revenues Poses Challenge for Virgin Islands’ Environmental Fund

A proposal from Senator Dwayne DeGraff, aiming to employ the Timeshare Environmental Infrastructure Impact Fee for enhancing beautification projects through the Waste Management Authority, inadvertently revealed an emerging issue for the territory.

Officials from both the Office of Management and Budget (OMB) and the Bureau of Inland Revenue (BIR) noted a decreasing trend in the revenues flowing into this fund over the years.

On Monday, OMB Director Jenifer O’Neal shared with legislators that post all pertinent deductions, the residual amount designated for the general fund stood at $5.5 million and $4.5 million for fiscal years 2022 and 2023, respectively.

The payment towards the Timeshare Environmental Infrastructure Impact Fee, as per Ms. O’Neal, is essentially voluntary, being contingent on self-reporting. She urged the respective authorities to amplify tax collection efforts, stating that enhanced enforcement is the viable pathway to augmenting revenues.

With a notable influx of visitors to the territory, many of whom opt for timeshare facilities, Ms. O’Neal highlighted the potential for increased fee collection. However, BIR Director Joel Lee identified a structural dilemma.

He apprised the legislators of a waning timeshare market, particularly mentioning a loss of a timeshare base on St. Croix, which he foresees as contributing to a revenue deficit in this segment moving forward.

On a positive note, Mr. Lee informed committee chair Sen. Donna Frett-Gregory of ongoing diligent audits concerning timeshare collections. “We examine trends, and respond proactively if we observe a decline,” he assured. Yet, he acknowledged the limitation of resources, which currently impedes the BIR from performing annual compliance checks on timeshare establishments. Ironically, Mr. Lee sees a silver lining in this constraint, suggesting that the unpredictability of audits has historically played to their advantage, maintaining an element of surprise that could potentially spur compliance.