The high cost-of-living due primarily to the COVID-19 crisis and war in Ukraine is currently a major concern practically all over the world. The general consensus seems to be little can be done especially in a free-market society that – to make matter worse – greatly depends on imports for food and other necessities.
However, a story out of Aruba in today’s edition shows that alleviating the impact for the most vulnerable in society is possible. Prime Minister Evelyn Wever-Croes stated that since taking office (she is in her second four-year term) the old age pension was raised three times.
The same goes for the minimum wage, while the reparation allowance went up twice. Government reportedly also lowered wage- and income-tax rates on the one hand and increased their threshold on the other hand so more than 36,000 persons don’t have to pay these.
In addition, the AZV general health insurance premium for seniors was reduced and owners of modest homes in terms of value benefit from a lower property tax rate, but those with more expensive real estate pay a higher percentage. The succession (inheritance) tax was eliminated and the profit tax cut from 25% to 20% to help businesses cope.
Although all this may sound a bit like an early re-election campaign in Oranjestad, one can hardly deny that the list is pretty impressive when it comes to protecting the weakest of the island’s community. That does not mean the remaining two Dutch Caribbean countries could easily follow suit.
For one thing, while Aruba too has financial supervision, its relevant arrangement with the Netherlands is slightly different. And, as St. Maarten Prime Minister Silveria Jacobs recently pointed out, Aruba may obtain loans on the international market while St. Maarten cannot at this time.
Any local reduction of taxes, social premiums, etc., must therefore be compensated to keep the budget balanced. This translates to cutting cost and/or extra revenues that the still-recovering private sector would need to largely produce.
Nevertheless, the Wever-Croes II Cabinet deserves credit for its decisive action in this matter. Talking about relief is one thing, providing it quite another.
