Consumers Coalition wants to know how tax reform will benefit workers | THE DAILY HERALD

PHILIPSBURG–The St. Maarten Consumers Coalition wants to know how government’s proposed tax reform system will benefit workers.

The Coalition says Finance Minister Perry Geerlings had indicated last year in a meeting of the Central Committee of Parliament that “the tax system has to change as it is outdated, susceptible to abuse and not conducive to the current economy.” Geerlings said at the time that not fixing the system would result in “unfair competition” from surrounding tax jurisdictions, but indicated that caution must be taken to ensure the country stimulates investment and entrepreneurship and does not become a tax haven.

Representative of the Consumers Coalition Claire Elshot said at a press conference on Friday, that so far, all the changes in the tax system have benefitted businesses, investors and government. She wanted to know how the proposed tax reform will benefit consumers and the “small man” in particular. “How will these tax reform proposals bring down the cost of doing business in St. Maarten and consequently bring down the prices for goods and services we have to pay in this very high-priced economy? This information is still not forthcoming,” Elshot said.

She asked how wage tax reform will affect workers. She said for wage and income taxes, government will seek to broaden the tax base, simplify execution and control by eliminating deductions such as gifts, reduce the ceiling of interest deduction for personal home and professional expenses (in relation to employment), the abolition of arbitrary/accelerated depreciation and reduction of investment allowance, replacement reserve, premiums for voluntary pension, life insurance, annuities, and widows/widowers pension FZOG premiums.

“In other words, the Ministry of Finance and this government wants us to pay more wage tax by broadening the tax base and by eliminating, abolishing deductions we could make until now which will lower our taxable income and thus, we could pay less taxes,” Elshot said.

“Taking away these deductions will be a punishment for the workers by taking much more money out of their salary and wages and leaving them with less money to spend or buy goods and services which become more and more expensive. In other words, this government wants to make it attractive for businesses charging them less taxes and charging us the workers more and more. This is the tax reform in the pipeline? As the Minister of Finance in a press release asked us to be factual, let him bring the facts so that everybody can know how the tax reform of the wage tax will benefit the workers.”

Elshot said Geerlings had also informed Parliament about Turnover Tax (ToT) reform. The idea is to broaden the tax base, make it practical and easy to control by eliminating exemptions, and keep the rate at five per cent. “In other words, no more exemptions for the consumer and the small man. Does that mean that more goods and services will fall now under the ToT,” she asked?

There will be a move to abolish the transfer tax and include transfer of real estate in ToT. This will make the buyer the taxpayer, but the notary remains liable in the process. This will create additional revenue because that was once a four per cent tax will become tagged to the five per cent ToT levy. Some income sources will possibly be transferred from income tax to ToT as part of the shift from direct to indirect taxes. Keeping the ToT system is seen as better by government than adopting the more complex Value Added Tax (VAT) levy.

“As Consumers Coalition, we would like to ask the Ministry of Finance to come up with the facts of the new ToT tax system that government is preparing. Until now, no information nor explanation has been given on how the 94 per cent poor and needy households are going to be affected by the new indirect taxes system,” Elshot said.

“As Consumers Coalition, we look at indirect taxation as having a greater burden (relative to resources) on the poor than on the rich, as both rich and poor pay the same tax amount for consumption of a certain quantity of a specific good. The taxpayer (the business) who pays the tax does not bear the burden of tax; the burden is shifted to the ultimate consumers. We want government to explain to us how the ToT reform in preparation is becoming less of a burden for the poor and the needy consumers in our society,” Elshot said.

Source: The Daily Herald