Today’s news that the Dutch Government approved a sixth tranche of NAf. 48 million in liquidity support for the third quarter is most welcome, as is the agreement reached on an amended draft kingdom law to establish the Caribbean Body for Reform and Development COHO reported on in Wednesday’s paper. It seems clear that St. Maarten will require continued financial assistance from the Netherlands also considering a recent forecast by the International Monetary Fund (IMF) that the economy won’t recover to pre-coronavirus pandemic levels until 2024.
Among conditions for more soft loans is executing a so-called country package of restructuring measures supervised by the COHO. Proposals include the implementation of a property tax.
Opposition Members of Parliament (MPs) and others have spoken out strongly against this plan. Particularly assessing the value of homes and attaching a fiscal amount to such is a concern.
Many people inherited the land on which they often built their own house brick by brick, usually with the help of relatives, neighbours and friends in a process known as “jollification.” Additions were frequently made later to accommodate growing families, so that the size of a home does not necessarily reflect the wealth of its owners.
One of the ideas is to only charge vacation condos owned by non-residents, also because they sometimes rent these out when off-island and don’t pay tax on the earnings. However, such an approach is not without risk.
There is an interesting story related to a similar issue from Nevis in this edition. Due to the impact of COVID-19 the island administration there suspended its so-called Alien Landholding Licensing Fee of 10 per cent that foreigners pay when purchasing real estate – on top of the regular 10 per cent transfer tax – for nine months to stimulate economic activity.
During that period a total of more than EC $70 million in sales were made despite the global crisis. Food for thought?
