ST. THOMAS, VI — The Committee of the Whole, chaired by Senate President Milton E. Potter, reconvened at the Earle B. Ottley Legislative Hall to hear testimony on high fuel prices. Discussions covered topics such as gas pricing, global market trends, inflation, and alternative renewable energy solutions. Additionally, senators received updates on the comparison between sales tax and gross receipt taxes. 

Senator Potter emphasized that the meeting revolves around the rising cost of living in the territory. He noted that senators posed critical questions regarding the state of the economy in the previous meeting held at the Capitol Building on Monday, March 3^rd. He noted that the goal of the meeting today is to identify strategies and solutions that will positively impact the quality of life in the Virgin Islands.

Commissioner Nathalie Hodge of the Virgin Islands Department of Licensing and Consumer Affairs (DLCA) acknowledged the ongoing frustration regarding the price disparity between the St. Croix District and the St. Thomas-St. John District. While fuel transportation logistics may seem comparable, she explained that St. Croix benefits from an on-island fuel terminal, whereas St. Thomas and St. John depend on smaller, more frequent shipments, contributing to price variations. Despite these significant price differences, DLCA faces challenges in its regulatory scope, which does not extend to producing long-term economic data, CPI reports, or setting retail fuel prices. Additionally, issues such as determining profit margins without a price freeze order, conducting extensive economic analyses, or regulating fuel pricing structures fall under the jurisdiction of other agencies.

A major obstacle, is the considerable transparency gap in St. Thomas, were limited access to pricing data fosters uncertainty, according to Hodge. Unlike St. Croix, where Sol Petroleum provides detailed pricing information, St. Thomas lacks clear insight into pricing factors, leading to public skepticism and concerns that higher costs result from inflated profit margins. Senate President Potter voiced his frustration over this lack of transparency, emphasizing that the current pricing system leaves much to be desired. He stated that legislative policy will be examined to mandate greater transparency and accountability in fuel pricing for the St. Thomas-St. John District.

As a potential solution to rising fuel costs, Virgin Islands Energy Office (VIEO) Director Kyle Fleming reaffirmed the agency’s commitment to promoting electric vehicle (EV) adoption as a viable alternative. He emphasized that transitioning to EVs would allow the community to rely on a locally controlled energy source rather than remain dependent on volatile global fuel prices. With inflation continuing to drive up gasoline costs, many working families are struggling to afford fuel while managing other financial obligations. By addressing these factors, VIEO aims to reduce reliance on imported fuel, stabilize energy costs, and provide residents with a more sustainable and economically viable transportation solution. Senator Alma Francis Heyliger questioned whether the efficiency and durability of electric vehicles would differ between districts due to the contrasting terrains, with St. Croix being relatively flat and St. Thomas having a hillier landscape. In response, Kyle Fleming assured that EVs perform well regardless of topography. He noted that St. Thomas currently has a higher number of electric vehicles, demonstrating that the island’s hilly terrain does not pose a barrier to their performance. 

Joel Lee, Director of the Virgin Islands Bureau of Internal Revenue, outlined the distinctions between sales tax and gross receipts tax. While sales tax is collected from consumers by retailers, gross receipts tax remains a direct business obligation. A proposed sales tax would also extend to online and mail-order sales based on transaction thresholds. The financial burden on businesses includes costs for software, system upgrades, and inventory tracking, with unclear tax regulations posing potential administrative challenges. While a sales tax could generate new revenue, its implementation would require substantial government investment in infrastructure and personnel. Additionally, the lack of precise data on end-user sales complicates revenue projections. National tax trends show that 44 states and Washington, D.C. have standardized sales tax systems, with the Streamlined Sales and Use Tax Agreement serving as a potential model. A well-defined tax structure with clear exemptions is essential to minimize administrative burdens. For tax reform, consulting the Tax Study Commission is recommended before implementing changes. Lee cautioned that the gross receipts tax is tied to bond covenants, modifications are restricted. 

Senator Potter emphasized the importance of thoroughly evaluating tax structures before developing a strategy to ensure that neither consumers nor the government face unintended negative consequences.

Senators present at today’s Committee meeting included Milton E. Potter, Kenneth L. Gittens, Marvin A. Blyden, Angel L. Bolques, Jr, Dwayne M. DeGraff, Ray Fonseca, Novelle E. Francis, Jr., Alma Francis Heyliger, Hubert L. Frederick, Marise C. James, Franklin D. Johnson, Carla J. Joseph, Clifford A. Joseph, Sr., Avery L. Lewis, and Kurt A. Vialet. 

The Division of Public Affairs is committed to providing the community with accurate information on legislative proceedings and other events at the Legislature of the Virgin Islands. Visit legvi.org. 

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