The service industry in the British Virgin Islands has welcomed a tax break which will exempt gratuities, service charges, and tips from income tax, passed last week, and retrospective to the beginning of the year.
Speaking to the legislative council meeting on August 20, Chief Minister and Minister for Finance, Economics and Development Planning, the Honourable Ralph T. O'Neal explained that:
'The people employed in the service industry...who depended on their gratuities, tips, and service charges for a boost in their pay, especially during the high season, suffered quite a reduction in wages because of the 9/11 effect.'
The Chief Minister then went on to recommend that in order to recompense service sector workers, the 7% witholding tax on tips and service charges should be removed.
Although the bill was eventually passed, the BVI Island Sun reported that the provision removing income tax on gratuities faced fierce resistance from the Opposition, who argued that as the bulk of those employed by the Islands' service industry are expatriates on contract, such an exemption would result in 'an exodus of funds' leaving the territory.
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