News that taxes on the old age pension AOV will be eliminated and in some cases lowered (see Thursday newspaper) was no doubt welcomed by existing as well as prospective seniors. Finance Minister Marinka Gumbs explained that about 6,300 elderly stand to benefit, more than 85% of whom are currently being taxed.
This, despite the fact that their AOV income often falls below the minium wage. Many are thus forced to seek extra income to survive, but when they do the pension takes them into a higher tax bracket.
With the planned changes, a combined 1,129 recipients would move to a tax-free bracket of 0%. Some 1,339 others will see significant reductions.
Considering how relatively low the AOV is compared to the cost-of-living in St. Maarten, this decision seems more than justified. It will be interesting to see when the bill will be implemented, as income tax is filed annually.
Something just seems wrong with people contributing to a solidarity fund their entire working life only to be taxed after their turn to reap the already-sparse fruits finally arrives. To a certain extent that’s also the case for private pensions that may be likened to savings plans for retirement but become taxable when paid out.
Let’s face it, older persons generally don’t have it easy in this country and anything that can reasonably be done to relieve them from further burdens during the last phase of their lives is a worthy cause.
