SXMElections.com

The St. Maarten Hospitality and Trade Association (SHTA) wasted no time in presenting its Christmas wish list (see Wednesday paper) to the newly-sworn-in Gumbs cabinet. There is certainly nothing wrong with that, especially because it regards the main employers’ organisation of the Dutch side.

While much of the release focussed on issues with government-owned companies, a call once again was made to repeal the turnover tax (TOT) because of its “extremely destructive nature.” The association used as argument that, according to the recent presentation of Finance Minister Martin Hassink in Parliament, annual income for the national treasury has stayed flat at about NAf. 420 million.

Moreover, TOT revenues also remained stagnant for the first 10 months of this year at 118.2 million guilders, compared to 118.6 million in 2013 and 113.9 million in 2012 during that same period. SHTA concluded that the tax rate hike from 3 to 5 per cent has not worked and the “law of diminishing returns” is in full effect.

The two per cent TOT increase actually was introduced per February 11, 2011, so by rights one would have to compare the earnings since then with those of 2010 and before. At the time it was supposed to produce an additional 46 million guilders per year to achieve a total budget of 444 million, a target that obviously indeed never was met.

SHTA is probably correct in saying the measure strengthened the “grey economy” and gave an added advantage to competitors operating outside of the local jurisdiction, but that is also a matter of fiscal compliance. The lack of such continues to be one of St. Maarten’s greatest problems that must be tackled urgently to create a more level playing field.

Although many alternatives to the TOT have been suggested over the years, none seemed to be able to count on widespread support, which is generally the case with any new levies or taxes. For example, when it was proposed to either collect excise tax on or increase the turnover tax for – now ridiculously cheap – alcohol and cigarettes, there was uproar from within the business community that this would make the destination less attractive to especially shopping cruise passengers and affect its renowned duty-free status.

So saying “no” to the TOT is one thing, coming up with truly viable alternatives quite another. It must be said, SHTA has done its part in various papers, but one still can’t get away from the impression that the underlying desire is to pay less tax, which of course doesn’t help balance the budget.

As the saying goes, everyone wants to go to heaven, but nobody wants to die to get there.