The U.S. Virgin Islands Senate passed a series of new taxes expected to bring in $250 million in the next five years.
Gov. Kenneth Mapp had been urging the government to pass the taxes to address the government's imminent financial crisis. The taxes are on cigarettes, alcoholic beverages, carbonated sugar beverages, and on time share rentals.
The Senate voted 9 to 5 in favor of the taxes late Tuesday.
The governor is expected to sign the measure upon his return to the territory from Washington, one of his spokespersons said. The territory doesn't have an across-the-board sales tax. It has a low real estate tax, the spokesman said. And since it is a territory, residents only have to pay a local income tax and not a federal income tax.
On Wednesday, S&P Global Ratings put its B rating on the islands' matching fund bonds and its B-minus ratings on its gross receipts tax bonds on negative credit watch. The agency cited the Virgin Islands' "growing liquidity challenges," specifically mentioning its two days cash on hand.
The rating agency release came out after the Senate vote, though it treated the vote as something that might possibly happen. S&P said the islands were hoping for an operating expenses loan based on passage of the new taxes. "It is not certain that … approval will lead to timely access of cash flow needed to address the current liquidity crisis," the agency wrote.
