On 16 September 2008, in a second contest following a spill motion, Nelson lost the leadership of the Opposition and the Liberal Party to Turnbull.

Governor Turnbull argued that the revenue picture had changed completely because of the new federal tax laws and their impact on the Territory's Economic Development Commission programme.

4 State of the Territory address delivered by Governor Charles W. Turnbull on 13 January 2003 and reproduced in full by St. Thomas Source on 14 January 2003.

7 State of the Territory address, delivered by Governor Charles W. Turnbull on 31 January 2005 and reproduced in full by St. Thomas Source on 1 February 2005 (see www.onepaper.com stthomasvi).

In the annual State of the Territory address in January 2005, Governor Turnbull reiterated the goals of the previous year increasing Government revenues while restricting Government spending and supporting the private sector.

In the first draft, Governor Turnbull asked for 88 million in federal financial assistance for the next five years. In exchange, the Territory would be committed to, inter alia, a balanced budget.

According to Governor Turnbull, the Virgin Islands could lose up to 600 jobs and up to 63 million in revenue in fiscal year 2005 because of these new federal tax laws.16

In the last elections for the position of Governor, held in 2002, incumbent Charles W. Turnbull of the Democratic Party, in office since January 1999, was re elected for his second and last four year term, with 50 per cent of the vote.

Following the 2007 federal election, at which the Howard Government was defeated, Nelson was elected leader of the federal Liberal parliamentary group in a contest against former Minister for Environment and Water Resources Malcolm Turnbull, and became the Leader of the Opposition on 3 December 2007.