Dear Editor,
The need for tax reform in St. Maarten is undeniable. With a fragile economy, limited revenue streams, and increasing reliance on external funding, a fairer and more stable tax system is not a luxury but a necessity. However, the current approach risks doing more harm than good. The recent proposal by former Minister of Finance Ardwell Irion is a stark example: a narrow reform of the profit tax, without an integrated plan for the broader fiscal framework.
This piecemeal approach is not only ineffective – it is potentially damaging. A tax system is an interconnected structure. Altering one component, such as the profit tax, without accounting for its impact on other taxes – like income tax, wage tax, turnover tax, and social security premiums – can lead to unintended consequences. These may include shifting tax burdens, forcing entrepreneurs to abandon income tax status in favor of costly legal entities, and creating legal inequality.
Moreover, St. Maarten lacks – with all due respect – the institutional resilience to continuously implement ad hoc reforms. The Tax Administration has long struggled with capacity issues, compliance rates are low, and public trust in government institutions is fragile. Any new fiscal instrument must be not only economically sound but also administratively feasible and socially legitimate.
Reforming the profit tax in isolation, as suggested by Minister Irion, without parallel changes to the income tax, for example, could even backfire. In a small, open economy like St. Maarten, businesses are highly sensitive to tax burdens. A standalone adjustment to the profit tax could discourage investment without achieving a fairer distribution of the tax load.
What St. Maarten truly needs, in my opinion, is a coherent fiscal policy plan with clear goals: broaden the tax base, reduce the informal economy, improve compliance, and support economic growth. This requires transparent consultations with the private sector, the people of St. Maarten, and international partners – not quick fixes driven by political or financial pressure.
A solid, inclusive, and integrated fiscal strategy is no easy feat – but it is the only path to sustainable public finances. Quick patchwork measures like Minister Irion’s proposal may earn short-term political points, but they risk undermining the larger goal: building a fair and future-proof tax system for St. Maarten.
That said, the intent behind Minister Irion’s initiative – to support micro, small, and medium-sized enterprises and modernize parts of the tax legislation – is commendable. It reflects a willingness to tackle long-standing issues and a recognition that reform is overdue.
Now, what is needed is to channel that momentum into a broader, more coordinated reform effort – one that strengthens the entire fiscal foundation of Sint Maarten and serves all citizens equitably and sustainably.
Marco Aalbers
Former Tax Inspector on St. Maarten and active in the Caribbean in the field of tax law education.
