A U.S. District Court judge ordered the federal government yesterday to repay $400 million in customs duties and excise taxes to the Virgin Islands, as amount that is twice the annual budget of the Carribean territory.
It was the second straight day Judge Oliver Gasch has ordered the federal treasury to make a large reimbursement of excise taxes. Tuesday he ruled Puerto Rico was entitled to more than $105 million in federal gasoline excise taxes the U.S. has collected the past four years.
In yesterday's decision, Gasch ruled the three U.S. Virgin Islands (St.Thomas, St. Croix and St. John) were entitled to about $250 million in excise taxes the federal government has collected on gasoline refined on the islands and shipped to the mainland the past 12 years.
In addition, Gasch ordered the federal government to repay another $150 million to the island government in customs duties on petroleum products that have been shipped from the Virgin Islands to the U.S.
U.S. attorneys contended the Virgin Islands were entitled to keep only those customs duties on goods imported into the islands, and argument Gasch rejected.
"It would be surprising if Congress intended that only the insubstantial amount of duties collected on imports into the Virgin Island's" be sent to the Virgin Island's treasury, Gasch said in his opinion.
In addition to ordering the reimbursements, Gasch said future excise taxes on gasoline refined in the Virgin Islands and shipped to the United States and customs duties on petrolieum products should be turned over to the Virgin Islands. The excise tax amounts to between $50 million and $60 million a year and the customs duties total about $25 million.
The Virgin Islands government has been negotiating its claim for the money with the Justice Department, according to Peter Hiebert, legislative assistant for Del. Ron Delage (D-Virgin Islands). But Hiebert said the Justice Department opposed settling the dispute because it felt the federal government had a strong case in court.
Hiebert said Gasch's ruling in favor of the Virgin Islands would "strengthen our hand" in seeking a negotiated settlement.
Hiebert said whatever amount the islands eventually get could be used to help solve the problems caused by the tripling over the past 18 years of the Virgin Islands' population to 105,000.