~ Support proposal for urgent economic relief ~
PHILIPSBURG--A number of business associations and a local union have pledged their collective support for a proposal for urgent economic support that was presented to government by the St. Maarten Hospitality and Trade Association (SHTA).
Backing the proposal are the St Maarten Marine Trades Association (SMMTA), St. Maarten Timeshare Association (SMTA), Indian Merchants Association (IMA), Workers Institute for Organised Labour (WIFOL) and the SHTA.
A key element of the proposal presented to government on March 19 is a 90% payroll subsidy to employers (including government and Non-Governmental Organisations NGOs) for a duration of six months. According to joint press release, from the Labour Force survey 2018 it can be concluded that the average monthly wage-bill for the country is NAf. 62.5 million. At 90%, that amounts to NAf. 340 million over a six-month period or US $180 million. SHTA said the payroll subsidy “will not only guarantee jobs in the private sector, but also in the public sector, as wage tax revenue will continue to make a large contribution to the funds needed to run the government. Payroll expenses are by far the largest single business expense on St. Maarten across all industries. Payroll liabilities, when these cannot be met, have the single biggest socioeconomic impact; people lose jobs and companies irreversibly close. All companies will be affected by the lack of tourism arrivals, unlike after the hurricane when construction took over as an economic driver.”
The associations and WIFOL urge government to approve robust measures to counter the economic fallout that will come from the worldwide coronavirus COVID-19 crisis and its disruption to the travel industry and by extension other industries in St. Maarten along with other effects on the financial markets.
The associations and union applaud the initiative of government to project support over the upcoming 12 months, but suggests implementing a short-term package urgently for the immediate six months. The associations and union in solidarity said in a press release that: “It is urgent to reduce uncertainty of loss of income and loss of jobs as soon as possible for St. Maarten’s employees and their households.
“Many other countries including our neighbours understand the long-lasting effects that this virus will have on the tourism/travel industry and thus their economies and have already implemented far reaching policies to alleviate the concern of its citizens. Some countries that have not yet announced measures, such as Anguilla, are already seeing mass layoffs of employees. By the union and employers working together, we hope to reduce the necessity of layoffs here on St. Maarten.”
Collectively the associations represent more than 70% of the employed labour force in St. Maarten. SHTA, IMA, SMMTA and SMTA are the internationally recognised employers’ representatives for St. Maarten by the International Labour Organization (ILO), whereas WIFOL represents approximately 3,000 members, all employees working under a collective labour agreement. “Together the members of these associations contribute the most to the government coffers, via employee paid wage taxes, business paid turnover tax, room tax and profit tax,” it was stated in the release.
Other key elements the proposal presented to government include reducing Turnover Tax (ToT) to zero per cent for six months. The associations request that ToT be set to 0% to stimulate local economic activity for longer on island circulation of funds and help reduce foreign reserve risk by spending more locally. A 0% ToT will also have a deflationary effect on the cost of living as prices will go down by the tax percentage, which is currently included in almost all prices, thus, stretching the assistance a longer way. “With businesses closed there will be a significantly reduced contribution to government anyway and so it is a good opportunity to restructure this tax to be less destructive to our supply chain and the multiplier effect on the cost of goods.”
Stakeholders express concern about the social aspects of the economic downturn. Increased unemployment leads to decreased income, lack of household necessities and hence an incentive for an increase in crime.
As most businesses are still seeking economic recovery after Hurricane Irma there are little to no reserves in place to weather this storm. As the basis for calculations SHTA used the 2018 Labour Force Survey, the 2018 Business Census and the 2019 World Bank Trust Fund Report (WBTF).
“Other channels of help may well be required to meet different needs, these can be provided in addition too, not in lieu of this proposal. We believe this is a fair and equitable distribution method that should be relatively easy to implement across all business sectors, not just employers in the hospitality business, because the payroll information already exists in the tax filings. The employers’ associations further mandated the largest of the four, the SHTA to speak on their behalf for continued representation and information,” it was stated in the release.
The associations continue to plead with government officials involved in this decision process to include the business community in its deliberations “so that we can add value towards developing the solutions, not only in the short term, but in the longer term as well.”
To support research by the Ministry of Finance, a private sector survey is launched at shta.com/survey-covid19. Companies are requested to fill this in as to compile an assessment of the national economic loss.
