“Customs, Tax Department thwart ministry’s intentions”

The Saba Business Association (SBA) and Saba Merchants Association (SMA) issued a joint response to State Secretary of Finance Frans Weekers’ package of measures announced on October 10, and to the new customs system. The business community also wrote a letter to Director of the Tax and Customs Department on Bonaire Angel Bermudez in outlining their grievances.

The measures announced by Weekers focused on alleviating some of the financial burden experienced in the Caribbean Netherlands since 2010. These envision an expanded list of products exempted from general spending tax ABB, a reduction of US $0.10 on excise duties on gasoline, and a property tax exemption of the first US $50,000 on the value of second homes of individuals. The property tax is to be reduced from one to 0.8 per cent for most individuals and businesses and to 0.4 per cent for hotels. The measures are what the Island Government, SMA and SBA have been lobbying for since the taxation changes took effect on January 1, 2011.

The measures show that State Secretary Weekers “understands the plight of our islands,” the release stated, “and his continued commitment to make the right changes underlines his willingness to develop these islands in the best possible way.” The business community believes the intent was to cut red tape, reduce business administration costs, and thus increase the ability of micro businesses to reduce prices and increase the purchasing power of citizens.

These intentions, they believe, have been “completely undermined by the Customs and Tax Departments that fall directly under the Department of Finance.” The new customs system would force businesses to “undergo undue administrative and financial costs related to the detailed implementation of the Asycuda World system,” SBA and SMA stated in pointing out that unlike the over 90 countries that use the system, Saba does not have a registered Gross Domestic Product (GDP) or the infrastructural capabilities to implement the system. They question the value of this system on a micro-scale economy with the burden falling primarily on supermarkets, which would have to itemize and code hundreds of imported goods. Saba businesses purchase comparatively small amounts of each item due to the scale of local demand and the lack of storing facilities. Local businesses argue that Asycuda World is meant for much larger economies that produce and export their own goods, and that it is used to protect a local industry which is non-existent on Saba. They believe the system to become an added burden on the already overtaxed private sector, hindering job creation, sustainability and growth. No additional revenue would be collected, creating only logistic challenges since “90 per cent of the invoices are not and cannot be received until the cargo boat arrives,” it was stated. The business community is also aggravated about the fact that Asycuda chapters and codes are only available in Dutch, while Saba’s language of instruction is English. They stated that understaffed micro-businesses would likely be forced to pay a broker to implement the requirements, increasing costs that will ultimately be passed on to consumers. SMA and SBA lobbied to have this burden reduced by requesting an 8-day grace period allocated after the cargo is received, allowing them to fill out forms and issue tax payment. They requested that codes be introduced only for exempted goods and one code for everything else for supermarkets and restaurants. They claimed it was onerous to learn the new system in a 6-hour course weeks before the end of the year, reiterating the scenario of mid-December 2010, when businesses were informed that the ABB would take effect on January 1, 2011. SBA and SMA argue that such inconsiderate deadlines emasculate State Secretary Weekers’ stated goal “to foster economic growth and development.”

Source: “The Daily Herald” 2012-11-17