Distribution of government income and expenditure in the Caribbean Netherlands

In a letter dated December 10, 2014, Ronald Plasterk, Minister of Internal Affairs and Kingdom relations, informed the Second Chamber about the intention to provide information on the total generated tax revenues and government expenditures for the Caribbean Netherlands and broadly split these for Bonaire, St. Eustatius and Saba. This would only be done once. This exercise is also partly performed at the request of the islands, in particular, St. Eustatius, by letter dated December 2, 2014 to the Minister of Finance.

Tax and contribution revenues

For the calendar year 2014, the Tax Office – Caribbean Netherlands has investigated the revenues from national taxes and social security premiums for each of the three islands of the Caribbean Netherlands. Use was made of cash, bank and other payment data, supplemented with revenues that had to be reviewed manually and that were allocated to one of the islands of the Caribbean Netherlands. On this basis, a fairly detailed and almost complete picture of the income per island could be created. In total, in 2014, the tax office received an amount of over $ 142 million in state taxes and premiums.

Broken down by island the following picture emerges:

Revenue 2014 from national taxes and insurance contributions
	in USD 1.000	in € 1.000
Bonaire	116.492	90.303	81,8%
Sint Eustatius	16.851	13.063	11,8%
Saba	9.051	7.016	6,4%
Total	142.394	110.382	100 %

1) The contributions for social security include the premiums for AOV, the pre-premium for AVV and income-based premium for health insurance and the contributions paid by employers for employee insurance (primarily premiums for health care).
2) An average exchange rate of USD / € in 2014 (1.29) is assumed.

Government expenditure Caribbean Netherlands

To create a breakdown of government expenditure on Bonaire, St. Eustatius and Saba has been made for the fiscal year 2014. For more than half of the total amount it was possible to precisely examine the expenditure per island. For the remaining expenditures the following assumptions were made to arrive at a breakdown by island:

· Similar to the government spending review CN, expenditures related to kingdom tasks, like defense and foreign affairs, were not included, because these expenditures benefit all countries of the Kingdom.

=> It has been decided also to include incidental expenditures on the islands. This may cause a distortion due to expenses that occur incidentally in 2014, like the expenses by Economic Affairs for moving the powerplant on Saba (€ 0.9 million). However, ignoring incidental expenses (which were substantial in each of the last few years) would not result in a good picture of the overall government spending. Where possible, substantial recurring cash flows that take place over a number of years were averaged over a number of years (e.g., for airports, school buildings, renewable energy).

=> For a substantial part of the costs (over € 60 million) there is no good breakdown available. This applies to the rotating police and customs personnel for the three islands. In order to make the best possible distribution of government expenditure, for these expenditures the following distribution keys were applied:

• The expenses of the Tax and Customs have been allocated on the basis of an overall cost estimate.
• The expenditures on Social Affairs (mostly benefits) and student support (OCW) are expected to have a strong relationship with the population; therefore allocation of these expenses occurred in proportion to the population of each island.
• The remaining expenses are distributed in accordance with the so-called CN-key. This is half the expenses equally distributed over the three islands and the other half of the expenditure in proportion to population of each island. This considers the importance of the number of residents and that the small size of Statia and Saba will add extra cost compared to the wealthier residents of Bonaire. This concerns mainly to expenses of V & J (police, prisons) and Finance (financial supervision).

The annex depicts an itemized list of the different expenditures per island with notes (in Dutch).
Based on the assumptions and principles explained above, the following picture of expenditure by island:

Government Expenditure 2014 (in € 1,000)
Bonaire	191.391	66,7%
Sint Eustatius	54.280	18,9%
Saba	41.453	14,4%
Total	287.124	100 %

In summary

Subject to the above described assumptions and principles leads to the following overall revenues from tax and insurance premiums and expenses in Caribbean Netherlands:

Net income and expenditure per island	Government Expenditure(in € 1,000)	Taxes and premium contributions (in € 1,000)	Revenues in a % of government expenditures
Bonaire	191.391	90.303	47,2%
Sint Eustatius	54.280	13.063	24,1%
Saba	41.453	7.016	16,9%