That government raised 24 million Netherlands Antillean guilders more in revenues than originally budgeted during the first half of this year (see related story) is obviously welcome news. It regards mainly room, transfer and car rental tax as well as timeshare, casino and lottery fees.
Apart from proof Finance Minister Ardwell Irion is keeping his promise to go after debtors, this indicates a clear rebound of stayover and cruise tourism, according to the Committee for Financial Supervision CFT. They expect a full recovery of the country’s nominal gross domestic product (GDP) in 2022 and its real GDP in 2023.
To go from deficits to surpluses, income must be increased primarily by enhancing fiscal compliance. Optimising the Tax Office and collecting backlogs in concession, permit and land-lease fees are some of steps being taken in that regard.
CFT proposed taxes on casino winnings and direct imports (online purchases), plus an adjusted room tax for short-term vacation rentals. These reforms do not appear to be unreasonable in terms of adding to the already rising cost of living and doing business.
All this does not mean St. Maarten is out of the woods yet. COVID-19 crisis liquidity support has been requested from the Dutch government for the first time this year to cover an expected shortfall in the current quarter.
That request remains pending, because of disagreement on conditions set by the Kingdom Council of Ministers RMR to start phasing out the related 12.5% reduction in public sector benefits. Not only St. Maarten, but also Aruba (where the cut was 12.6%) and Curaçao “gave something back” to their civil servants with approval of neither the CFT nor State Secretary of Kingdom Relations Alexandra van Huffelen.
Nevertheless, all three’s hospitality-industry-based economies are doing well, an encouraging sign that should help prompt those involved to seek joint solutions rather than conflict. Important is to put the islands on solid footing so they become self-reliant and won’t – barring another calamity – require any new loans going forward.
