Mapp Says Cruise Ship Passengers Are Leaving With Too Many Duty-Free Cigarettes
CHARLOTTE AMALIE – Cruise ship passengers are purchasing liquor and cigarettes in foreign ports in excess of what is allowed by law leading to a significant loss of both local and federal revenue, Gov. Kenneth Mapp said Wednesday.
The Mapp Administration said that it has been investigating complaints from Virgin Islands retailers about the lack of information and enforcement in regard to purchases made outside the United States.
Mapp advised Senate President Neville James of the Administration’s findings in a letter regarding action taken on recent legislation, to include his approval of Bill No. 31-0023, which establishes a sin tax to be used for drug and alcohol treatment and other purposes.
“I take this opportunity to advise the Senate that some members of the St. Thomas – St. John Chamber of Commerce are reporting that many cruise ship passengers returning to the U.S. are purchasing alcohol and cigarettes/ tobacco products from foreign ports (or in cruise ship stores) in excess of the permitted duty-free allowances and mis-declaring, whether inadvertently or otherwise, where these products are being purchased,” Mapp wrote.
“The higher duty free allowances being claimed by many of these passengers are available only for purchases of products bought within the USVI.” the governor added.
Mapp said that the complaints from local businesses were “true and substantial” and that in some cases passengers are not declaring purchases at all.
“The U.S. Congress has provided the higher duty-free allowances specifically and exclusively for goods purchased within the USVI by U.S. residents returning to the U.S. mainland,” Mapp said. “Duty free goods purchased outside the Virgin Islands and in cruise ships stores in excess of the allowances for foreign jurisdictions, and improperly declared, are depriving both the U.S. and V.I. governments of revenues and USVI merchants of sales. In addition, it should be noted that inaccurate declarations violate federal law.”
Discussions with officials from U.S. Customs and Border Patrol confirm there is cause to investigate further and develop “appropriate governmental responses,” Mapp said.
The governor added that the problem appeared to be compounded by a lack of clear information given to cruise ship passengers or, in some cases, the absence of any information at all.
Under current rules U.S. residents returning to the U.S. mainland are allowed to bring back five cartons of cigarettes and five liters of alcohol purchased here in the territory without paying any duties (once one bottle is a product of the USVI), however they are only allowed to purchase one liter of alcohol and one carton of cigarettes in foreign ports or cruise ship stores before they must pay Customs duties or forfeit their merchandise.
The Governor said that these rules have been neither adequately explained nor enforced.
“On its face, this sets the stage for systemic misuse of the USVI-specific expanded customs exemptions,” Mapp wrote “Although we don’t have financial data on the actual or potential scope at this point, our brief review suggests that the loss of sales and concomitant loss of revenues, both federal and local could be substantial… As a result of what we have found, my administration is now engaged in a concerted effort to address and correct this problem and protect and both local Chambers of Commerce to promote the USVI shopping advantages over foreign ports and cruise ship stores. We will also work with our partners in the cruise industry so that adequate and accurate information is provided to the passengers, and we will work with CBP to ensure improved levels of inspection services so that the U.S. government may realize the additional revenues due it, while protecting the Territory’s duty free shopping advantages granted by Congress.”
Mapp also approved Bill No. 31-0115, which repeals the exemption from excise taxes on cigars and permits smoking in cigar factories. the duty free destination advantage that the U.S. Congress has granted us. Our efforts will include: first, working with the V.I. Department of Tourism.
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