There is growing concern in the private sector about intended measures to increase public sector revenues as advised by, among others, the International Monetary Fund (IMF) and Committee for Financial Supervision CFT. Some of these are part of a so-called country package with restructuring measures as condition for COVID-19 crisis-related financial assistance, to be implemented with oversight from the Caribbean Body for Reform and Development COHO.
While one can agree that government should get more out of the local economy, its only significant pillar tourism is just barely starting to recover from the long-lasting effect of COVID-19 especially on travel. Many also feel that reportedly-high fiscal non-compliance – probably the biggest issue – should be tackled better first.
Each on their own, the proposed 7.5 per cent tax for online purchases, tax on foreign-owned property, a “sin-tax” on alcohol and tobacco products, as well as raising the collective health coverage wage limit of Social and Health Insurances SZV from NAf. 67,816 to NAf. 120,000 per year may not seem that big of a deal. Taken together, however, they could have quite an impact on the cost of living and doing business, the vacation home and real estate investment climate, plus earnings and jobs in the private insurance branch.
With no more payroll subsidies to companies or income and employment support to affected individuals said forthcoming, there is already fear that the dominant hospitality industry won’t rebound quickly enough for some businesses to survive the coming months. Whatever decisions and steps are taken will need to also carefully consider that risk.
