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Saturday, August 13, 2022
HomeNewsArchivesLegislature Expands Tax Breaks for Video and Arts

Legislature Expands Tax Breaks for Video and Arts

Among other legislation approved in session Friday, the Senate passed a bill rewriting existing tax breaks for movie and video productions to meet film industry expectations and to allow companies to sell their tax credits if the credits are larger than their tax obligations.

The bill sponsored by Sen. Clifford Graham repeals and replaces the STARS Act, which was enacted in 2011 and gave large tax breaks to encourage video and film production. (See Related Links below)

Graham’s bill gives tax credits of 10 to 17 percent of the wages and salaries of Virgin Islands residents employed on the project, which the company can then sell to any other V.I. taxpaying business, if they owe less than the credit. The credits were set up that way to give bigger incentives to bigger projects, while also ensuring the territory still benefited.

It also gives a break on the territory’s hotel occupancy tax, based on the number of rooms booked and for how many nights.

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The Senate passed a bill sponsored by Sen. Diane Capehart to expand preferential status for local contractors on government contracts by further reducing preferential bonding requirements and requiring semiautonomous government agencies to give preferred provider benefits.

Under the V.I. Preferred Provider Act of 1971, central government contracts entered into by the Department of Property and Procurement are required to go to local contractors on a list of preferred providers, even when the local bid is more expensive, as long as the local provider’s bid exceeds the lowest bid by no more than 15 percent. That law, which has been amended several times over the years, also has reduced bonding requirements for preferred providers, with bid bonds capped at 2 percent of the bid amount for up to $300,000, and 5 percent for contracts greater than $500,000. Performance bonds are capped at 25 percent of the bid for preferred providers.

Capehart’s bill expands the reach of the Preferred Provider Act to include contracts by semiautonomous agencies that do not rely on Property and Procurement. That includes the University of the Virgin Islands, the V.I. Water and Power Authority and the territory’s hospitals, among others.

It removes language in the law saying the commissioner of Property and Procurement "may accept forms of surety from preferred bidders other than bid bonds or performance bonds," replacing it with a short list of specific alternative forms of surety, including "a 20 percent cash escrow" of the performance bond cap of 25 percent of the bid.

This would mean that on a $100,000 government contract, a preferred provider could set aside $5,000 in escrow and that would suffice as surety to guarantee performance on the contract.

The Legislature also passed another bill sponsored by Capehart to allow police learning of a missing minor or dependent adult to get to work immediately tracking him or her down instead of waiting 24 hours.

Senators also approved bills:
– turning a block of Frederiksted’s Strand Street into a one-way street;
– allowing a casino located in areas zoned R-3 or R-5 to have a maximum of eight floors;
– making it a misdemeanor to make or sell fake a driver’s license or identification card;
– commending St. Thomas-born V.I. Olympic volleyball player Megan C. Hodge for her athletic achievements;
– amending an appropriation to run potable water lines to Five Corners on St. Croix, to instead replace water lines in Frederiksted and run potable water to the cruise ship pier in Frederiksted;
– setting a floor on interest rates charged by banks in the territory;
– honoring Joseph Olmeda, the owner of Colorama Home Improvement Center on St. Croix;
– and honoring Celestino White, former St. Thomas senator, and naming the senior citizen’s residential facility in Estate Thomas for him.

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