The Department of Labor says some businesses will see their taxes go up while others may see a decrease as payroll tax calculations change in the territory next year. The department of has set meetings for employers to learn about the changes.
According to the department, the goal of the reform is “To put in place a tax system that is easier to apply and operate.” Another goal is to “Provide an adequate level of benefit financing for the long term.”
Labor is calling the reform the “Payroll Variation Experience Rating System.” The system specifically will fund the payment of benefits to unemployed Virgin Islanders.
The Source asked Labor to explain how the new tax was going to be calculated. The answer is complicated. However, one can see that effort is being made to make sure those employers whose employees use the unemployment system often (such as seasonal workers) pay a fair share.
The Labor Department emailed the Source that, “The Payroll Variation method uses an employer’s quarter-to-quarter change in payroll (total wages) over a three-year (twelve-quarter) period. Employers with the biggest relative increases in payroll would receive the lowest tax rates while those with the biggest relative decreases would receive the highest rates. This method is essentially an extension of the system currently used in Alaska. The main difference is that payroll increases by employers are considered as well as declines.”
The Source also asked Labor how this system compares with stateside systems. Labor Commissioner Gary Molloy replied in an email, “All States have and do make changes to their unemployment tax structure. The State of Connecticut is also currently making changes this year to its structure due to difficulties insolvency.” He added the Virgin Islands’ new system complied with federal law and avoided program decertification by the U.S. Secretary of Labor.
In a press release, the department wrote, “It is imperative that all employers attend these meetings, as all employers are affected by the unemployment insurance tax rates.” According to the Department, businesses do not collect the tax; at the end of each year, the Unemployment Insurance system will calculate the upcoming year’s rates based on the quarterly filings of wages from each employer.
Employers will be able to question Labor staff regarding these changes during the town hall meetings. The town hall meetings will take place from 6-8 p.m.
The first one is at the University of the Virgin Islands Great Hall on Tuesday. Click here to register VIDOL Unemployment Insurance Employer Town Hall (STX) Tickets, Tue, Feb 21, at 6:00 PM | Eventbrite
The second is at the Legislature Annex on St. John.
Click here to register VIDOL Unemployment Insurance Town Hall (STT) Tickets, Mon, Feb 27, at 5:30 PM | Eventbrite
The third is Thursday at Windward Passage Hotel on St. Thomas, Feb. 27.
Click here to register VIDOL Unemployment Insurance Town Hall (STT) Tickets, Mon, Feb 27, at 5:30 PM | Eventbrite
If you have any questions, please contact VIDOL’s Unemployment Insurance Division at (340) 773.1994 on St. Croix or (340) 776.3700 on St. Thomas.
