Prime Minister William Marlin (left) and Finance Minister Richard Gibson during the tax summit. To the right is Minister Emil Lee. Photo contributed
St. Maarten News – “No drastic fiscal steps are necessary to improve revenue,” Finance Minister Richard Gibson said in his opening address at the tax summit that took place last Friday at the Westin. “Increase of tax rates is not on the table. We have to modernize and simplify our tax laws, the way taxes are filed and we have to improve the infrastructure to collect taxes efficiently.”
The minister also addressed tax fraud and tax evasion, the question of moving from direct to indirect taxes, and switching to value added tax or keep the turnover tax in place. “In this process we should give some thought to income redistribution and lessening of the tax burden on the poorest in our country.”
Minister Gibson said that tax compliance in St. Maarten currently stands at 22.5 percent. “Each percentage point that we can improve on the current tax compliance represents approximately 20 million guilders in additional income for the government. Some Caribbean countries have a 30 percent compliance rate and member states of the Organization for Economic Cooperation and Development score 34 percent.”
“If we are able to boost our compliance rate from 22.5 to 26 percent without raising any taxes, it will represent a structural additional income of 70 million guilders,” the minister said. “Then we can stop living from hand to mouth.”
The ministry of finance, the tax department, the fiscal department, and SZV developed the program for the tax summit with the help and insight of two-time former Prime Minister of the Netherlands Antilles Etienne Ys.
“He who thinks about the future lives it,” Minister Gibson quoted Atlas Shrugged and Fountainhead author Ayn Rand.
“Critique should be constructive and connected to future solutions,” the minister said. “Living on St. Maarten, going about our daily activities, relying on what has worked for many years in the past and expecting that it will be the same in the future is not thinking about the future. It is projecting the past into the future.”
Gibson pointed out that throughout history gross domestic product growth more or less stayed in step with the real economy, but that changed with the financial crisis in 2008.
According to a 2015 report from Credit Suisse the richest 1 percent of the population in Western Europe owns 31 percent of all wealth, while the poorest 40 percent just owns 1 percent. Around 60 global citizens own about 50 percent of the world’s wealth, Gibson said. “Most of this wealth is no longer used for productive investments in the economies, as was the case in the past. This has contributed to weakening of demand and a global reduction in GDP-growth. Where this will end nobody knows.”
Fiscal intervention could influence this situation, the minister said, adding that this would not work for St. Maarten because nobody from the richest 1 percent lives on the island. “We don’t have billionaires like Warren Buffett, Bill Gates, Carlos Slim, George Soros or Larry Ellis.”
Source: Today SXM Minister Gibson at tax summit: “Tax reform is absolutely necessary”