Every so often the discussion about taxing tips in St. Maarten comes up again. The idea is that employees in the hospitality sector have an unfair advantage over others because part of their income is tax-free.
However, the island has a tourism economy and wages are relatively low compared to the cost of living including rent. For those many working in the industry, tips remain essential to make ends meet.
What’s more, there is currently quite a bit of confusion about tipping in general on the Dutch side. Many establishments apply a service charge of 15% or even higher, often incorrectly listed as tax on the bill.
Online, people are advised to tip US $1 per drink at a bar and leave an extra 10% for food without table service. For table service, the recommended average is 15-20% if there is no service charge.
In a few of the latter cases clients are – at times strongly – suggested to choose between tipping options, usually from 10% to 20%. The fact that practices can differ per business creates an undesirable lack of clarity, particularly for visitors.
What’s more, the impression exists that the service charge is not always shared among staff as intended. This puts pressure on patrons to give waiters a modest additional amount.
Some prefer to tip in cash, because it is also said that when paying such with a credit- or bankcard personnel don’t get anything. Needless to say, all this does not exactly contribute to a pleasant vacation experience.
So, before seriously considering taxation of tips, government would do well to better regulate this matter and – together with stakeholders like relevant employer organisations and labour unions – create a better-regulated system where rules of the game are less ambiguous.
