Opinion: ToT exemption probably not helpful

In its editorial, the Daily Herald writes today, that many were surprised to read in Monday’s paper that Finance Minister Martin Hassink is seeking a way to exempt products sent directly to St. Eustatius and Saba from the five per cent turnover tax (ToT). After all, up to now government had created the impression that nothing much could be done.

The reasoning was that the ToT already existed when the two smaller islands became part of the Caribbean Netherlands and import duties as well as a six per cent general consumption (sales) tax ABB were introduced there subsequently. In addition, the ToT is a tax on company revenues, not products, while St. Maarten in effect also was subsidising the operations of water and electricity provider GEBE on the two special public entities. The latter problem currently is being addressed by splitting up the utility company, while the minister’s announcement means also the turnover tax issue may be resolved soon.

However, he pointed out, even when the local businesses involved are allowed to deduct products sold to the other islands from earnings subject to the ToT, there is no guarantee they will pass on these savings to their overseas customers. That is true, but considering the ties these entrepreneurs apparently have to Saba and Statia, one would expect them to be considerate in this regard. By creating the possibility, St. Maarten in any case will do its part and demonstrate good will without its having a having a major adverse effect on the national treasury, in light of the vast difference in scale. In fact, this is exactly where observers think the contested instruction from the Kingdom Council of Ministers to Governor Eugene Holiday for an integrity investigation might have been avoided: if more flexibility had been shown towards the Dutch at an earlier stage about several issues related to the other islands. The perception is that certainly the positions taken by former Justice Minister Roland Duncan on, for example, the proposed joint border management system at SXM Airport and the Coast Guard did not help.