In a recent Senate Committee meeting on Education and Workforce Development, the state of unemployment in the U.S. Virgin Islands was a central topic. Senator Marise James, chair of the committee, challenged Labor Commissioner Gary Molloy on the veracity of the reported 3 percent unemployment rate, questioning its reflection of the territory’s actual employment scenario.

Commissioner Molloy, addressing these concerns, highlighted the complexities in unemployment metrics. He differentiated between the U-3 and U-6 unemployment rates, as defined by the U.S. Bureau of Labor Statistics. The U-3 rate, which counts the unemployed as a portion of the civilian labor force, was 3.6% nationally from Q4 2022 to Q3 2023. In contrast, the U-6 rate, encompassing unemployed, underemployed, and marginally attached workers, was higher at 6.8% for the same period.

For the USVI, Molloy confirmed a U-3 rate of 3.5%, closely aligning with the national average. However, he was unable to provide the U-6 figures for the territory. He pointed out that many non-employed individuals might be missing from these statistics due to their absence in the data system.

Senator James raised concerns about the lack of U-6 data for the Virgin Islands, despite its availability nationally. In response, Molloy revealed that the labor force participation rate in the territory, last calculated in 2022, stood at 49.5%. This rate measures the proportion of working-age people who are either employed or actively seeking employment.

Expressing dissatisfaction, Senator James highlighted the discrepancy between the seemingly low unemployment rate and the labor participation rate. She emphasized the need to improve labor participation in the territory.

Molloy suggested that generous unemployment benefits could be influencing the low participation rate. He cited data indicating that residents were fully utilizing the available 26 weeks of unemployment benefits, a trend he attributed to the influx of federal and pandemic-related funds.

Senator James, however, pointed to another potential factor: the balance between the cost of living in the territory and the benefits of employment. She hinted that inadequate wages might be deterring people from entering the workforce, thus impacting the labor participation rate.

This discussion underscores the need for a deeper understanding of employment dynamics in the USVI and highlights the complexities in interpreting unemployment statistics.

The Virgin Islands Bureau of Internal Revenue (BIR) has launched a tax penalty waiver initiative for the year 2023, offering a significant reprieve to both individual and corporate taxpayers who are behind on their income and gross receipts tax payments.

The waiver program commenced on November 2, 2023, and is set to conclude on December 29, 2023. It is crafted to bolster compliance among taxpayers, motivating them to file all pending gross receipts tax returns by September 2023 and income tax returns for the tax year 2022. To take advantage of the waiver, participants are required to pay off the entirety of their outstanding taxes, including any accrued interest.

Joel Lee, the BIR Director, stated that the waiver is comprehensive, covering all past due periods. This encompasses gross receipts taxes up to September 2023 and both corporate and personal income taxes for the 2022 tax year.

By settling their unpaid taxes, taxpayers can utilize this program to their benefit, steering clear of additional penalties and ensuring compliance with the U.S. Virgin Islands’ tax regulations.

The BIR strongly encourages eligible taxpayers to seize this opportunity to voluntarily regularize their tax status. For detailed information or inquiries regarding the penalty waiver program, taxpayers are invited to reach out to the BIR directly at (340) 773-1040, extension 4854 or 4250.

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.