Plasterk: “No reason for changing ABB-tax free list”

The Daily Herald writes that Dutch Minister of Home Affairs and Kingdom Relations Ronald Plasterk stated in a letter to the Second Chamber of the Dutch Parliament Wednesday that “even though it was always a theoretical possibility, a further expansion of the list of ABB exempted products for now isn’t considered opportune.” There are several reasons for this, the minister explained in his reply to written questions that members of Parliament’s Permanent Committee for Kingdom Relations had posed after their visit to the Caribbean Netherlands in January this year.

The Committee members expressed their concerns about the steep prices of consumer goods on the three islands. They wanted to know what the local governments could do to reduce the prices and whether there were possibilities to lower the cost of freight transport to the islands. They also asked about the possibility to expand the list of tax-exempt goods. Per January 1, 2013, a number of basic necessities where it comes to food were exempted from ABB.

In his letter, Plasterk questioned whether broadening the list of tax-exempt goods was an efficient and effective measure. He cited the consequences for the budget of government as a reason, but also the fact that the advantage of the implementation of the list of basic products that were exempted from ABB per January 1, 2013, for the consumer had proven to be limited. The high price level in the Caribbean Netherlands is high due to a number of factors: the limited economic scale, relatively high production costs per unit, the high freight costs and the limited competition, remarked Plasterk. Private companies decide the price of transport of freight to the islands. Government has no authority or other possibilities to influence the freight costs.

The Executive Councils, however, do have the authority to regulate the prices of goods and services through the Price Law BES, stated the minister. “The Executive Councils are authorised to set maximum margins for certain products and services. They have not or barely made use of this authority in the past years,” he stated.

The ABB, which is a Dutch national tax, is expected to yield 26.7 million euros in 2014 on the three islands combined. The revenues are not differentiated per island, as this is also not done per municipality or province in the Netherlands. The structural costs of the Tax Department Caribbean Netherlands for 2014 have been calculated at some 9.5 million euros. Besides the ABB, the department also collects many local taxes and levies.