Health Minister Emil Lee put an old idea squarely back on the table during Wednesday’s press briefing. He said Government was looking into a so-called “sin tax” on alcoholic beverages and tobacco products.
While something similar has been proposed before, the Minister expressed a desire to add sugar soft drinks for obvious reasons. The revenues are to help finance the new National Health Insurance (NHI) and the idea fits into the policy of moving from direct to more indirect taxes.
In many countries these “bad” enjoyment products are the subject of excise levies. Objections to that scenario included affecting St. Maarten’s duty-free image and the country’s well-documented limited collection abilities. Also due to the lack of a closed cash register system such as in Curaçao enabling a comprehensive introduction of their OB sales tax, it was suggested to raise the existing ToT turnover tax for those particular goods.
In both cases enforcement and control might be a bit difficult, which means the measure’s effectiveness would depend largely on honesty and cooperation of the entrepreneurs involved. With general fiscal compliance known to be rather low, that sparks concerns.
Some also say these items are so popular among visitors that it could have a negative impact especially on cruise passengers and the destination is operating in a very competitive environment. However, even slightly going up in price would probably still keep them relatively inexpensive here compared to most of the island’s tourism source markets. Besides, a cocktail currently already goes for up to US $8 per glass in various bars and restaurants, so it’s not like going out for a drink is necessarily cheap.
Other alternatives include selling mandatory temporary local drivers’ licences to guests renting cars as they do elsewhere in the region. Adding a small real departure tax to the facility charge for travellers at Princess Juliana International Airport SXM could be considered as well, also because – unlike the harbour – the Airport doesn’t pay a concession fee to Government as a result of its expansion financing conditions.
The bottom line is that any drastic increase in the cost of visiting the island and/or doing business will face understandable opposition. That doesn’t necessarily mean nothing should be done, but it makes sense to proceed in a careful and modest manner.
