for the Virgin Islands to build an armory on

@pproximately 10 acres. We believe that section 403
would result in a "second" transfer of the 230 acres
in questioi from the United States to the Virgin Islands
but would not relieve the Virgin Islands of its
responsibi:.ities under the mortgage given at the time
of the first transfer.
In our report on H.R. 3756
the Administration recommends (1) that the substance
of Section 403 be returned to the form in which it
originally appeared in Section 404 of H.R. 3756 as
introduced, and (2) that the House Committee amendment
be stricken and a new section be added to H.R. 3756,
at the end of Title IV allowing the General Services

Administration to release from the mortgage given by

the Virgin Islands approximately 10 acres of land for
the construction of an armory for St. Croix. We believe
that such an amendment would accomplish the purpose
of facilitating armory construction.

On the following provisions we defer to other agencies:

Section 203, 301, 402, and 502 would have the Secretary
of the Treasury administer and enforce, to a varying |
extent, income tax and customs laws in the territories

of the Northern Mariana Islands, Guam, the Virgin Islands,

and American Samoa. The Department of the Interior
defers on this issue to the Department of the Treasury.

We stress, however, that the issues raised by these

sections are complex.
Customs laws, which may be
Federal or local, may be applicable to one territory
but not another.
Also, the application of United States
income tax laws differs from territory to territory.
The collection of taxes has been traditionally the function of local territorial governments. The Governors
of Guam, the Virgin Islands, and the Northern Mariana
Islands believe that the Federal administration of taxes
would intrude into territorial prerogatives, and therefore oppose mandatory Federal collection of territorial
taxes.
We agree that the proposal contained in H.R.
3756 raises a significant question as to whether it
reverses the long standing United States Government
policy of fostering greater local self-government for
the Territories.
The Interagency Task Force reviewing territorial policy
is addressing various issues, including tax adminstration
considered in these sections.
Presidential decisions

will be forthcoming later this year. Among the options
to be considered by the Administration will be federal
training and technical assistance for territorial tax
collection agencies.

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