In a significant move for the U.S. Virgin Islands, Governor Albert Bryan Jr. recently signed Bill No. 35-0272, which amends the territory’s motor vehicle rental surcharge law. This legislation, introduced by Senator Angel Bolques, raises the surcharge on rental vehicles from $3.75 to $5 per day, which has the potential to generate up to $1 million annually for the Virgin Islands’ general fund. The increase aims to bolster funding for essential government services and infrastructure improvements
Why Was the Bill Proposed?
The primary goal of Bill No. 35-0272 is to create a more reliable and sustainable source of revenue for the U.S. Virgin Islands. With this additional funding, the government hopes to enhance public services and tackle infrastructure projects that are vital for the territory’s development. Senator Bolques has emphasized that the increase is a “practical and necessary step” to meet the growing needs of the island’s government
Initially, the surcharge revenue was intended for the District Road Fund to improve road conditions. However, an amendment was made to direct the revenue to the general fund, which can be used for a wider array of public services, allowing the Virgin Islands government more flexibility in addressing its financial needs
Who Will Be Affected?
The bill is primarily designed to target tourists, who are the main users of rental vehicles in the U.S. Virgin Islands. By focusing the surcharge on visitors, the local government aims to reduce the financial burden on residents, who are less likely to rent cars regularly. However, local residents may still feel indirect effects, especially in terms of transportation alternatives
Impact on Local Rental Agencies
The new surcharge may also affect local rental agencies, such as Avis, Budget, and Hertz, which dominate the car rental market in the U.S. Virgin Islands. These companies could see reduced demand as tourists look for more cost-effective transportation options. Travelers might increasingly opt for peer-to-peer car sharing services, ride-sharing platforms, or traditional options like taxis and public transit. The additional $5 per day surcharge could make renting a car less attractive, pushing visitors toward these alternatives
How Does This Compare to Other States?
To put this into perspective, rental car surcharges and taxes are common across the United States. For example:
- Florida imposes a $2 per day surcharge on rental cars.
- Many U.S. airports, including those in Los Angeles and Orlando, charge 10-12% in airport fees, significantly adding to the overall cost.
- In New York, a 6% rental car tax is standard, and cities like Chicago add up to 20% in combined taxes and fees
When compared to these larger U.S. cities, the $5 surcharge in the Virgin Islands remains competitive but may still impact the territory’s tourism industry, especially during peak seasons when visitors are sensitive to costs.
Conclusion
Bill No. 35-0272 represents a significant shift in how the U.S. Virgin Islands generates revenue from its tourism industry. While the added surcharge will provide much-needed funds for public services and infrastructure, its effects on local rental agencies and the broader tourism market remain to be seen. Will tourists continue to rent cars at the same rate, or will they explore alternatives like ride-sharing and public transit? Time will tell how the territory’s economy adapts to this new fee.
For those interested in reviewing the full text of Bill No. 35-0272, it is available for public access through the Virgin Islands Legislature.
Food for Thought
- Do you think this surcharge increase will have a significant impact on tourism in the USVI?
- Will this make ride-sharing services more appealing for tourists, or will traditional rentals continue to dominate the market?
- How do you think the government should prioritize spending this additional revenue?
