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Chamber Director Addresses Issues Affecting St. Croix's Bottom Line

Aug. 24, 2007 — The St. Croix Chamber of Commerce wants to work with the Department of Tourism and other agencies to help brand St. Croix and spur economic growth, chamber Executive Director Michael Dembeck told the Rotary Club of St Croix Thursday. Dembeck spoke at the Rotarians’ August speakers luncheon at Gertrude’s Restaurant about what the St. Croix Chamber is doing to improve the business climate on St. Croix and what the community and government can do to help.
“We are looking in a positive way to help shape legislation and establish a positive relationship with the Department of Tourism to develop tourism on St. Croix,” Dembeck said. “St. Croix is finally striving to establish its own identity rather than being lumped into the same equation with our brothers on St. Thomas and St. John.”
Dembeck linked that separate image and branding to the island’s infrastructure.
“Our infrastructure is critical to both our own daily lives and to attracting visitors,” he said. “We must fix or clear worn out and abandoned buildings, continue working on building roads, fix up our schools and give them attractive landscaping. We need to build a positive image of our island and a positive image of ourselves.”
Past efforts are beginning to pay off, Dembeck said.
“I think we are well on the way to developing a new image for St. Croix,” he said. “And we are looking for new airlift to St. Croix. But beyond tourism, we need to bring in new, different kinds of businesses that offer real opportunities for our young people. We need to build an education system that is not only one of the best in the Caribbean but one of the best in the U.S.”
Dembeck said a cap on civil liability cases in the territory would be good for economic development
“One major concern for businesses on St. Croix is the high cost of liability insurance,” Dembeck said. “One problem is the Virgin Islands’ reputation for being a Wheel of Fortune for cash awards. Currently there are no limits on what we call non-monetary damages; large monetary awards to individuals that are excessive.” Non-monetary damages are punitive awards and awards for damages such as pain and suffering that do not reflect actual monetary costs to a plaintiff.
Dembeck said where liability limits have been put in place, they have spurred development.
“I don’t know if you are aware of this but we do have a cap on medical liability,” he said. “The $50,000 cap for non-monetary damages has attracted doctors to the territory lately. There is a household supply company considering setting up on St. Croix. I won’t give their name. Their biggest concern is civil liability for accidental falls and the like. If you look at some of the suits and awards here, typically actual damages are in the $10,000 to $15,000 range. Insurance coverage is in the $50,000 range. But the lawsuits and awards are often in terms of three and four million dollars. It is unreasonable.”
The St. Croix Chamber is also interested in the possibility of territorial legislation affecting health insurance, hoping to influence the sort of program that may be developed so that it does not damage the business climate.
“There has been talk recently about bringing back the mandatory employer based health insurance bill brought to the Legislature last year,” Dembeck said. “We will certainly, as a Chamber representing our 300 members, want input to that, so it is fair and workable. One idea, for example, is providing health insurance through a government system and offering businesses some kind of incentive for that. Just as one possible scenario, say a reduction in the gross receipts tax for businesses that participate.”
A member of the audience asked Dembeck about the merits of a sales tax versus the current gross receipts tax. Dembeck did not make a definitive statement, but suggested a sales tax might be more advantageous to local businesses since, unlike gross receipts taxes; it might apply to goods coming from outside the territory.
“Look at the personal use tax,” he said. “The court struck it down. Residents can now go off island to make purchases and they don’t pay excise taxes on the purchase. But we pay gross receipts, putting us at a disadvantage.” (See Government Revenues Will Take a Hit with Personal-Use Tax Overturned).
Dembeck said the Chamber is asking the V.I. government to look at the entire tax structure and weigh the merits of gross receipts and excise taxes versus sales taxes.
“As you know, any tax you pay is ultimately paid by the consumer,” he said. “Our consumers, day in and day out, pay more for goods than consumers elsewhere.
Next month the Rotary Club of St. Croix hopes to have Police Commissioner James McCall speak.

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