Finance Minister Marinka Gumbs is reviewing taxation on tips (see Wednesday newspaper) and its impact. She stated this in response to questions posed by Member of Parliament (MP) Sarah Wescot-Williams.
The minister recognises that hospitality sector workers who receive tips are often in the lower income bracket. She finds it important to ensure tax policies support economic growth while fostering fairness. Gumbs is therefore conducting the necessary research and analysis to fully understand every implication.
Some feel such employees 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 many working in St. Maarten’s main industry, tips remain essential to make ends meet.
Wescot-Williams had referred to statements by an Aruban executive on the issue there. The latter suggested that while a lot of persons are on the minimum wage level, not taxing tips gives them a better income and contributes to elevating their social status.
Levying tips may indeed be ill-advised under such circumstances, because it can do more socioeconomic harm than good. The amounts involved probably don’t justify making a big effort either, especially when millions continue to be evaded elsewhere.
After all, the same edition carried a story about businesses not even registered in the local tax system and the need to address this flagrant lack of fiscal compliance. Now that seems like a worthwhile proposition.
