Smaller islands object to fiscal amendments

September 09, 2010 3:36 PM

THE HAGUE--Bonaire, St. Eustatius and Saba are against the Dutch Second Chamber amendments to the future fiscal laws of their islands. They asked Parliament for consideration.

Commissioners Roy Hooker of St. Eustatius, Chris Johnson of Saba and Jopie Abraham and Anthony Nicolaas of Bonaire voiced their opinion loud and clear in a hearing with the Second Chamber's Permanent Committee of Antillean and Aruban Affairs NAAZ in The Hague Wednesday morning.

The new fiscal laws for the three islands were negotiated as one package which took some 2.5 years to realise and changing this agreement a few months before the laws go into effect on January 1, 2011 is undesirable, stated Hooker, Johnson, Abraham and Nicolaas in agreement.

The only issue on which the standpoint of the islands slightly differed was the 15 per cent profit tax (winstbelasting) that the Socialist Party (SP) wants to introduce through its amendment. Bonaire and Saba are pertinently against a profit tax. St. Eustatius is willing to consider. But, said Hooker, only if the real estate tax (vastgoed belasting) and the value added tax (algemene bestedingsbelasting) are scrapped.

According to Johnson, a 15 per cent profit tax would be an additional tax burden since there would already be a value added tax of 6 per cent. A profit tax would raise the cost of living because the small businesses on Saba would have to pass this extra cost on to the customer. He said the effects of a change to the law package should be carefully calculated.

The SP amendment of introducing a 15 per cent profit tax instead of the value added tax and real estate tax might very well be carried in Dutch Parliament. But that depends on what the liberal democratic VVD party will do. The VVD might vote along if the SP supports the VVD amendment to introduce a higher income tax tariff of 38 per cent for the higher income bracket.

Sympathy

Green left party GroenLinks Member of Parliament (MP) Ineke van Gent said during Wednesday's hearing that the VVD and SP amendment had the "sympathy" of her party. "That is not to tease you, but that is because we feel that those who can pay more taxes should do so," she told the Commissioners.

Christian Democratic Party CDA and Labour Party PvdA indicated their support for the original fiscal package. The parties are not expected to support the amendments.

"Agreement is agreement," said MP Elly Blanksma-Van der Heuvel of the CDA. "When we adapt things to the original package, we actually change structure of the house," she said.

CDA supported a proposal of Labour Party PvdA MP Jeroen Recourt to ask Dutch caretaker Minister of Finance Jan Kees de Jager to research the effects of the amendments. "We need to know if the inconvenience outweighs the benefits," said Recourt.

Consequences

"It is important to know what the consequences will be so we can take these along in our consideration," said Blanksma-Van den Heuvel. Van Gent of GroenLinks agreed that this matter should be further researched. NAAZ Chairman Willibrord van Beek said that a letter would be sent to Minister De Jager to get some clarity before the debate on the fiscal system for Bonaire, Saba and St. Eustatius this Monday.

All three islands were against the VVD amendment to raise the tax tariff for the higher incomes. The islands want the Dutch Government to stick with the agreement that there would be a flat tax of 30.4 per cent.

Parties want a simplified tax system whereby the emphasis would be on indirect taxes. Also, it wouldn't be wise implement such "far-reaching" changes to the law package a few months before the laws go into effect, said Commissioner Abraham. He said the amendment would bring the law package "out of balance." He further pointed out that the islands also had to compete with surrounding islands in the Caribbean.

NuStar

MP Ronald van Raak of the SP said that government revenues had to "come from somewhere." He said that for example NuStar on St. Eustatius and other companies in the special economic zones on the islands paid 2 per cent profit tax. Under the proposed new fiscal system, there would be no profit tax. This means that there would be discrepancies in the Caribbean part of the Kingdom because Curaçao and St. Maarten are aiming for a 15 per cent profit tax. "I don't want major tax discrepancies," he said.

According to Van Raak, companies like NuStar would not leave because of a 15 per cent profit tax. "NuStar is not in St. Eustatius because the profit tax is so low. They are there because two major shipment routes cross each other near St. Eustatius," he said. He said that 15 per cent was "very reasonable" compared to the 25.5 per cent profit tax in the Netherlands.

Commissioner Hooker said in return that NuStar already largely contributed to government's coffers. Annually, the US company pays a fixed amount of NAf. 1.25 million, a considerably higher amount than the NAf. 850,000 that was paid previously. He mentioned that NuStar was the largest employer on the island and that a 15 per cent profit tax would be an issue for them.

Good package

Hooker said that employment was a principal issue in drafting the new fiscal laws. He said the current law package was good as it didn't increase the tax burden, while at the same time simplifying the fiscal system.

Commissioner Johnson expressed concern about the tax burden for small businesses. He said that Saba, for example, didn't have large businesses. He said the idea was to make the three islands more attractive for investors so they can become more self-reliant. An increased tax burden would be counter-productive. On the other hand, the intention was not for the islands to become a tax haven, he added.

Pensioners

Commissioner Abraham remarked that the law package hadn't taken into account that people with an old age pension AOV would financially suffer under the new fiscal system, while the rest of the population didn't. "The idea was that no one would suffer a setback, but that is what will happen with the pensioners. We are asking your attention for this," he said. MP Van Gent agreed that this should be checked because the older people should not suffer from this exercise.

The Party for Freedom PVV still has to determine its position on the law package. MP Eric Lucassen of the PVV said in an invited comment that the fact clarity was still lacking a few months before the new system was implemented, confirmed that the islands weren't ready for a new status as "public entities" of the Dutch Constellation. "The introduction of a new fiscal system has to be well-prepared, researched, balanced and in consultation. This is all last minute," said Lucassen.

NAAZ will handle the fiscal law package for Bonaire, St. Eustatius and Saba this Monday. On Wednesday, the laws will be handled in a plenary session, after which the laws will be sent to the First Chamber for approval. The laws go into effect on January 1, 2011.

(Source: St. Maarten Newspaper The Daily Herald)

8 September, 2010