Senate hearing considers doubling container tax; OMB projects $4.1M in new revenue, debate over VIWMA split

Senator Angel L. Balquez Jr. presented bill 36‑0039 to the Committee on Budget, Appropriations and Finance on July 10, proposing to modernize the Virgin Islands container tax by increasing length‑based flat rates and adding a fee for 45‑foot flat‑rack containers. Balquez framed the measure as a modest, predictable way to raise revenue for port operations, road and landfill impacts and anti‑litter programs, contrasting the territory’s flat, length‑based approach with neighboring jurisdictions that levy value‑based tariffs and higher layered taxes on imports.

What the bill would do - Raise the container tax for units up to 39 feet from $50 to $100; raise the 40‑foot rate from $100 to $200. - Add a new fee for 45‑foot flat‑rack containers (text of amendment cites $205 in one read‑out provided during testimony). - Introduce two small administrative fees: a $25 documentation/processing fee per container to fund oversight (salaries and O&M) and a $3 recordation/technology fee per container to fund digital recordation improvements (OMB proposal).

Revenue projections and distribution Julia Reimer, director of the Office of Management and Budget, presented an analysis based on Bureau of Internal Revenue (BIR) 2024 import data (19,315 containers total: 3,142 under 39 feet; 16,173 at 40 feet). OMB projected: - Revenue from adjusted container taxes: $3,454,800 annually - Documentation processing fee: $483,000 - Recordation technology fee: $58,000 - Total estimated annual revenue: approximately $4,100,000

Distribution dispute: OMB recommended a 75% general fund / 25% anti‑litter and beautification split (the latter to support a youth summer employment program). The bill’s sponsor and the Waste Management Authority (VIWMA) sought a different allocation: VIWMA requested a 50% allocation to the anti‑litter/beautification fund, split internally with 25% targeted to trash removal and 25% to a territorial anti‑litter summer program administered by VIWMA.

Positions on the record - Office of Management and Budget (Julia Reimer): Supported modernizing the tax and adding the small fees; recommended a 75/25 split in favor of the general fund to preserve government fiscal flexibility and to fund broader priorities (OMB also proposed the small $25 and $3 administrative fees to underwrite oversight and technology). - Bureau of Internal Revenue (Joel A. Lee): Reported historical container counts and said the bureau can implement the change and update systems within the statutory post‑enactment window. - Virgin Islands Waste Management Authority (Daryl Griffith, interim executive director/CFO): Supported the bill and asked for a 50/50 distribution of the added revenue (or legislative allocations to VIWMA) so the authority could reduce an accounts‑payable backlog that exceeded $20 million and expand household collection and convenience center upgrades. Griffith said adopting container revenues plus a pending garbage‑collection fee at the Public Services Commission would materially improve VIWMA’s finances. - Tropical Shipping (written testimony, Nisha O'Bain): Asked committee to note that container fees are a cost of trade borne by shipping lines that will be recovered in transport charges; company noted it supports the territory but urged the committee to consider impacts on customers and that flat racks are instruments of trade.

Senators’ concerns and committee discussion Committee members discussed consumer impact, competitiveness, and how much of the tax ultimately would be passed on to shoppers. Sponsors argued that the per‑container increase is modest when spread across thousands of units in a container and noted the territory’s flat rate remains comparatively low versus neighboring nations’ value‑based tariffs. Several senators voiced support for directing a substantial share to VIWMA to address urgent trash‑collection needs; others — including OMB — warned that routing too much revenue outside the general fund reduces legislative flexibility and may reduce incentives for VIWMA to address its structural revenue issues.

Next steps No vote took place. The committee heard testimony from OMB, BIR and VIWMA and received written testimony from Tropical Shipping; Crowley Shipping had been invited but did not submit testimony at the hearing. The measure will return for further committee consideration, and staff requested time to model downstream consumer impacts and implementation steps for the BIR and for ports and carriers to prepare paperwork and IT updates.