St. Maarten Hospitality and Trade Association (SHTA) and independent (former NA) Member of Parliament (MP) Christophe Emmanuel have a point (see Monday edition). While one can understand Committee for Financial Supervision CFT chairman Raymond Gradus saying in last week’s interview with this newspaper that the tax quota is low compared to the gross domestic product (GDP), “levying more” as mentioned is not a sensible option in the middle of this unprecedented coronavirus-related crisis.
The dominant hospitality industry has been hard hit after eight months of closure and is still down by some 40 to 50 per cent, most private sector salaries and/or hours were lowered by at least 20 per cent, and Parliament was expected to vote today, Tuesday, on financial benefits cuts of 12.5 per cent for civil servants and employees at government-owned or -funded entities, as well as 25 per cent for public office holders. Any increase in the cost of both living and doing business is quite undesirable particularly at this time of great social need.
In addition, it means reduced purchasing power and consequently would have an even bigger negative impact on the – often struggling – local business community. And if companies go belly up, the treasury could end up with less revenue, rendering the supposedly income-generating measure counterproductive.
Gradus is correct in saying the Netherlands will not keep providing liquidity support forever, but the only-just-barely-recovering tourism economy simply cannot carry a higher fiscal burden right now. Besides, the apparent decision to raise the foreign exchange licence fee from 1 to 1.5 per cent, although it may not seem like much, will already make things more expensive on an island where practically all consumer goods are imported.
If the biggest problem is lack of compliance, that is where the focus should be rather than taking the easy way out by penalising law-abiding citizens who do meet their fiscal responsibilities. Improved assessments, controls, audits, and collection can make a big difference in that regard.
Perhaps it would be best to leave the system itself as is, at least until the vaccination process leads to some normalisation of leisure travel, because what the country can surely use is stability, not upheaval. It was then-US presidential candidate George H.W. Bush who first told the 1988 Republican Party Convention: “Read my lips; no new taxes!”
