DP Statia pleads for no increase in property tax

The Daily Herald writes that to give the private sector of St. Eustatius and Saba “a fair and better chance of survival” and at the same time improve the budgetary room of the island governments of these two islands the Democratic Party (DP) of Statia suggests to extend the 2015 level of tariffs for property tax, including the threshold of US $70,000 until 2019, after which an evaluation of the economy is to take place.

The property tax destined for the Central Government for 2016-2019 is to be reduced in the proposal by 0.8 per cent to 3.2 per cent for hotels and by 1.4 per cent to 5.6 per cent for other eligible properties. This would allow Statia and Saba to introduce a 25 per cent surcharge, as allowed by law, without an increase of the tax burden, according to the DP. The plan, which DP says, would not compromise the agreement that tax revenue should not fall below the pre-2011 level comes at the start of the Caribbean Netherlands Week today, Monday.

After meetings with then State Secretary of Finance Frans Weekers in 2011 some “quick fixes” were implemented to support the economies and businesses, as well as allow some relief for private citizens. The tariffs for property tax were reduced, including an additional reduction to 0.2 per cent for hotels and 0.6 per cent for others. This decision was based on an agreement between the islands and the Dutch government that the total amount of taxes collected in Bonaire, Statia and Saba was not to exceed the amount collected under the former Netherlands Antilles. This amount of approximately $54 million was already to be exceeded in the fi rst year; the so-called BES taxes were levied.

For the years 2011-2014 the property tax was therefore set 0.2 per cent for hotels and 0.6 per cent for other properties. For 2015, the tariffs will be increased to 0.4 per cent for hotels and 0.7 per cent for other properties.

It has already been decided to raise the tax for the year 2016 back to the original level of 0.8 per cent for all properties eligible for property tax. This means, in particular for hotels, an increase of 300 per cent within two years and for other properties it amounts to an increase of more than 30 per cent, the DP is stating.

The tax revenue for 2014 in the Caribbean Netherlands is estimated at more than 90 million euros. According to DP there appears to be no valid reason to increase the tariffs from this perspective. “Although there are still no clear figures available about the state of the economy, it is clear to see that on all islands the economy is in bad shape,” the party said.

The BES fiscal system was to stimulate the economy and attract investment, DP said, but this condition has not been met. “Yet, the Central Government intends to increase the tax burden. Many businesses, in particular those with immovable property, based on insufficient information provided at the introduction of the BES fiscal system, have made the wrong decision to apply for taxation under this system. These companies are barely making a profit or are making no profit at all. They have to pay the property tax regardless of making a profit. They cannot make use of tax incentives such as investment deduction, innovation or environmental deductions, depreciation, et cetera. It also appears that no possibility exist to reverse their decision and to be eligible for the Dutch profit tax.

” Statia and Saba are struggling to stay within their annual budgets and cannot effectively carry out their responsibilities, while there is very little room to increase local taxes or introduce new taxes. The poor economy, the high level of inflation over the past four years, the poverty and low purchasing power of many citizens prevent the public entities to increase their local income, the opposition party is stating.

Although a report by Ideversa has established that the free allowances for the islands are not sufficient, an increase is not to be expected until 2017. “Poverty and lack of purchasing power of our citizens remain unchanged. There is no improvement in our economy in sight and the islands are struggling to deal with their annual budget, but the Ministry of Finance intends to raise the taxes with the result that more money will be taken out of the island’s economies,” DP said.