Keeping to his promise that he would provide further details on the wish of Saba and St. Eustatius to reintroduce the ToT in a letter to the Dutch Government, Johnson explained why the ABB has adverse effects on the island economies and also has a negative psychological effect on the people. Johnson used examples, arguments, assumptions and counterpoints to illustrate his point for removing the ABB.

 

The ABB mainly works as an import duty, a tax that usually has as main reason to protect local producers from unequal competition from abroad. However, St. Eustatius and Saba have no commercial producers.

 

Levying ABB requires Customs Officers to check imports at the ports of entry, the ToT does not. Because St. Eustatius has one local Customs Officer and Saba has none, these officers have to be flown in from Bonaire, which is a costly affair. This makes the ABB an expensive tax to levy and control.

 

There is also a psychological effect of having Customs Officers from off-island, Johnson pointed out. "It has led to a feeling in the minds of many that we are remotely operated, as was the case in the former Netherlands Antilles."

 

The ABB didn't live up to its original intention, namely to simplify the tax system after its introduction in the Dutch public entities Bonaire, St. Eustatius and Saba per January 1, 2011, to replace the ToT, which had been applied for 14 years, from 1997 to 2010.

 

In fact, the ABB only complicated the levying structure, since the ABB has to be processed separately for each ship(ment), for each order and from each supplier, whereas the ToT was charged once a month.

 

"One ship coming in from St. Maarten may have as many as 150 to 200 bills of laden or separate orders that have to be processed. Saba's and Statia's small scale make the ABB an extremely complex system."

 

The ABB also defied its original intention of eliminating double taxation. The ABB has lead to many forms of double and even triple taxation, Johnson said. "In practice the ABB is charged on Customs Insurance Freight. It is then charged in transportation again, and then in the service sector, for example at a restaurant, it is charged again to customers," he said, adding that the service aspect was also applied in the construction and financial services sector.

 

According to Johnson, no one should fear that the ToT would lead to speculation about the turn-over of local businesses and manipulation of the system by the business sector.

 

"Tax Office for the Caribbean Netherlands started operations long before the transition on October 10, 2010. At this point the Tax Department has more information about the turn-over of businesses than ever before. Also, fines can be imposed on any business found violating the tax laws."

 

The Tax department has just as much experience with the ToT as it was already operational under the tax laws of the Netherlands Antilles, Johnson contended.

 

The argument that the public entities should not have two different tax systems, one for St. Eustatius and Saba, and one for Bonaire, doesn't hold either, stated the Commissioner. "Saba and St. Eustatius already have differences in the tax laws and the level of ABB compared to Bonaire. Historically the two groups of islands had different tax law components under the Antillean fiscal structure."

 

Concerns that a difference in taxation between the two groups of islands are unwarranted as well. Having the ToT in St. Eustatius and Saba and the ABB in Bonaire wouldn't have a negative impact on the development of the economies, because the economies are very different, Johnson remarked.

 

The ToT is also simpler where it comes to border control, because the only form of control would be the search for illegal goods. The Royal Dutch Marechaussee could execute this task, with the assistance of local security guards if necessary.

The reintroduction of the ToT will not lead to a decrease in tax revenue and will be implemented budgetary neutral, stated Johnson. It will result in a lower tax burden and also reduce the administrative burden.

 

Johnson qualified the ABB as "one of the most negative effects" of Saba's new constitutional status and the direct relationship with The Netherlands. He promised that the reintroduction of the ToT would have an overall positive effect. "It would also demonstrate that the Dutch Government is willing to adapt to the real situation on the islands, to be practical, efficient and, most importantly, fair and objective in its choices for the islands and our people."

 

The Commissioner asked Minister Plasterk to forward his letter to the responsible Ministries, including the Ministry of Finance.

 

The delegation from St. Eustatius and Saba had already brought up their request to replace the ABB by the ToT during the so-called Caribbean Netherlands week in March. At that time Plasterk had indicated that he would cooperate in bringing this matter to the attention of his colleague, Minister of Finance Jeroen Dijsselbloem.

 

(The Daily Herald)

 

Click here to read the letter of Commissioner Johnson to Minister Plasterk