Hoteliers: Government Isn’t Collecting All It’s Owed In Hotel Room Occupancy Tax … DLCA and Tax Office ‘Not Aggressive Enough’
BEAUTIFUL OCEAN-VIEW HOTELS: The big hotels and commercial property ventures are paying their fair share of the hotel room occupancy tax — but more and more business leaders are asking — why are most property owners allowed not to pay?
CHARLOTTE AMALIE — Hoteliers and commercial property managers here say the V.I. government is not collecting all it is owed from people who rent out condominiums, apartments and timeshares for less than 90 days.
According to the V.I. Code, every person or business who rents their properties out on a short-term basis is required to charge their guests a 12.5 percent tax that is due to the territorial government.
“‘Hotel’ means every building or other structure or group of structures, including apartments, condominiums, timeshare developments and residences, kept, used, maintained, rented, leased, advertised or held out to the public to be a place where sleeping accommodations are furnished by the day, week, month or season, for pay, to guests, whether with or without meals,” Section 33.54 of the V.I. Code states.
Business owners want to know why the Mapp-Potter Administration is not exploring this easily accessible potential revenue stream when the government is so desperately in need of increased funds — and when by Gov. Kenneth Mapp’s own calculation there are at least 2,500 airbnb properties in the territory, not necessarily including all the properties for rent through Vacation Rentals By Owner (VRBO) and Travel Advisor dot com properties.
“All the government has to do is go online and Google ‘Virgin Islands vacation rentals,'” a source said, speaking on condition of anonymity for fear of retribution. “It is all there, the property name, many times the name of the owner, the property address — but the bottom line is that the government isn’t considering this at all!”
Property managers here say that each hotel and commercial property venture — which are required to have a license — just as the person who rents out their own house or condominium is — pay to V.I. coffers anywhere from 10,000 to 100,000 per month during high season in abiding by the hotel room guest tax of 12.5 percent.
But smaller concerns, some of which have been doing business in the Virgin Islands for at least 25 years — and are based out of the territory — simply refuse to charge their guests the tax.
“One person, who owns a villa rental company based in New Jersey, said that [they] would NEVER pay the Virgin Islands government even a penny of what they owe,” the source said. “They said that whatever money they gave to the government would be misspent anyway.”
In addition to applying for an obtaining a license from the Department of Licensing and Consumer Affairs (DLCA) and paying the hotel occupancy tax, property managers/owners are also required to obtain liability insurance for their short-term rental guests, the source said.
“The majority of homeowners are not license and are not paying any kind of tax — whether it is the hotel tax, or income tax on the revenues they accrue, or excise taxes — as required by law,” the source said.
Experts in the industry said that St. Thomas and St. John — where tourism is king — collect about four times the amount of hotel occupancy taxes compared to the Big Island St. Croix — because they have more demand for tourists there.
Since 1995, the amount of revenues collected under the hotel room occupancy tax are supposed to be deposited into the Tourism Advertisement Revolving Fund with the monies collected spent on tourism promotion throughout the territory.
“I’m surprised the government isn’t being more aggressive about pursuing this low-hanging fruit that is easily accessible to them,” the source said. “The Virgin Islands could always use more tourists — why not collect the money that is owed and payable to the government to not only increase revenues — but allow the Department of Tourism to have more resources to attract even more business? Every person who comes here spends money. It seems like a no-brainer.”