PHILIPSBURG--The Advisory Council has issued a negative opinion after examining the draft National Ordinance introducing a national health levy, a proposal from Member of Parliament (MP) Rolando Brison. It advises not to discuss this initiative law further.
Brison stated in the draft initiative law, filed on November 8, 2021, that “this legislation is intended to generate a new revenue stream for the country from tourists visiting the island.”
“The MP proposes a national health tax on tourists as a new means of taxation, to be applied the same way as environmental taxes and similar levies are levied on tourists in the Caribbean.”
The reason for the proposal is financial consequences of the pandemic for government’s coffers and for USZV, the implementing body for Social and Health Insurances SZV, which has been confronted with lower premium income and higher cost as a result of COVID-19. “The heavy financial pressure on the USZV has become worse due to the pandemic now that the government is unable to pay the overdue debts to the USZV,” Brison stated in the introduction to the initiative law.
According to the MP, “Tourism is the only likely source where the country could ever generate enough income to ensure the health care of both tourists and locals.”
Brison emphasises that “the urgency of this draft is such that for every day we don’t implement it, thousands of dollars are lost to the USZV. Brison sees reason to recommend that USZV use the existing system. And, he emphasises, “to add the provision “urgent Interest” to the draft.”
The Advisory Council notes that the legislative apparatus has been put under the necessary pressure to proceed with the introduction of the proposed law. In this context, the council draws attention to the following: “Firstly, significant private or public disadvantages in the event of delay” have been invoked as reasons for the proposed urgent entry into force. The implicit misconception that is made is that the government already claims the proceeds of the mandatory COVID-19 health insurance for tourists.”
At present, St. Maarten requires visitors to take out mandatory local COVID-19 health insurance under the programme called “St. Maarten Visitors Protection Plan”. This programme is run by a syndicate of locally recognised insurers including the Guardian Group Fatum, Massy United Insurance Ltd. and ENNIA Caribe NV, and is reinsured by A++ AM Best Rated Reinsurers.
The insurance is mandatory for all visitors and offers coverage for hospital cost, intensive care unit cost, transport cost, doctor consultations, isolation cost and COVID-19 test cost. This coverage is limited to US $50,000. In addition, the cost of any medical evacuation is also covered up to $20,000.
The council points out that as long as the government’s claim to any proceeds has not been legally established, there can in fact be no talk of “losses” if the present initiative law is not introduced. “Secondly, the projected urgency presupposes that there are no substantive policy or legal impediments to the proposal that require the necessary assessment time.” According to the Council, this “downplays” the process of creating sound new laws and regulations.
‘In this case, it is not a simple adaptation of an existing system, but the introduction of an entirely new means of taxation.”
There has been no evidence of preparatory work, the Council notes. “This means that the urgency needs to be further put into perspective.”
In the opinion of the Advisory Council, the need to replace the existing St. Maarten Visitors Protection Plan, which Brison’s proposal calls for, has not been established. According to the Council, by regulating the collection of insurance premiums by the government, the proposal “seems to be aimed at making it virtually impossible for commercial insurers to access this part of the insurance market.”
The members of the Advisory Council have found no indications that “the draft has considered the fundamental question of whether this is a task for the government.”
The Council concluded: “The driving force of the current draft law seems to be mainly focused on the levy and collection of discretionary income, as opposed to the creation of a fund to cover the medical and financial risks associated with admitting large numbers of visitors during the coronavirus pandemic. … The term ‘health tax’ is therefore very misleading. The levy is only partly related to the so-called COVID-19 risk, but the other part is actually a disguised tourist tax under the name of a health levy.
“This entails necessary objections, not only from a legal point of view, but also from an insurance point of view.”
The Health Levy seeks to charge a US $30 premium on arriving tourists, with half of that amount being made available for SZV to use in any manner it sees fit.
The Advisory Council contends that the draft law would abuse the current health crisis to make a profit. “If insurance coverage is possible for half the price, double this criterion should not be charged.” According to the Council, the current health crisis should not be abused.
In addition, no statement is made as to whether the SZV, with a $15 rate, can both offer insurance and cover its operational cost. “The financial section [of the draft law – Ed.] in particular falls short for these reasons, partly due to insufficient explanation of the expected concrete policy conditions, mandatory reserves, and legal solvency standards that apply to insurers,” it was stated in the advice.
Finally, the Advisory Council gives MP Brison a slap on the wrist by pointing out that, according to Indication 158 of the Instructions for the regulations of St. Maarten, an Explanatory Memorandum to a new draft national ordinance must be formulated in such a way that it is still open whether the draft will actually be approved.
The firmness with which MP Brison formulates the Explanatory Memorandum to the new Health Levy, stating, for instance, “There are some exceptions that need to be made with regard to this levy. The most obvious is that residents should be exempt,” leaves little room for constructive debate.
The council also concludes that the prescribed stakeholder consultations have not taken place sufficiently. The council deduces this from, among other things, the fact that tourists who reside almost exclusively on the French side of the island are not included in the proposal.
The council states that the draft contains “operational and legislative imperfections” and suggests that the initiator, in view of the objections mentioned, should not bring the initiative further into procedure.