GREAT BAY--Member of Parliament Viren Kotai is calling on government to move beyond years of discussion on tax reform and present Parliament and the public with a clear picture of what the new tax system will look like, when the transition will begin and when residents and businesses can expect to see those changes reflected in the taxes they actually pay.
Kotai raised the issue during the 2026 budget debate, arguing that government can no longer continue acknowledging weaknesses in the existing tax structure without establishing concrete timelines for reform.
“After years of discussing tax reform, we should no longer be satisfied with simply acknowledging that the system needs to change,” Kotai said. “We need to know what the new tax structure is supposed to look like, when the transition will begin, and when the people and businesses of this country can realistically expect to see that reform reflected in the taxes they actually pay.”
The MP also expressed frustration with revenue-generating measures repeatedly remaining “under consideration,” particularly proposals involving the taxation of short-term rental platforms.
Kotai acknowledged that the Ministry of Finance is receiving technical assistance from the International Monetary Fund and CARTAC on the issue, but said Parliament needs more than confirmation that the matter is still being studied.
“At some point, we have to move beyond consideration and into implementation,” Kotai said. “Either this is something the Government intends to pursue, or it is not.”
He said short-term rental platforms represent significant economic activity in St. Maarten and questioned whether government is losing substantial revenue because portions of that activity are not being adequately captured within the current tax framework.
Kotai asked government to provide a clear timeline for deciding how short-term rentals will be taxed, identify the specific assistance being provided by the IMF and CARTAC, and explain when Parliament can expect a concrete implementation plan.
He also wants the Ministry of Finance to disclose whether it has estimated how much revenue is currently being lost from short-term rental activity that is not properly captured by the tax system.
“The question is no longer simply whether this matter is being considered,” Kotai said. “The question is: when will the consideration end, when will a decision be made, and when will implementation begin?”
Kotai: Government Cannot Only Cut Spending
Kotai broadened his argument to government’s overall approach to public finances, saying the budget process has placed significant emphasis on reducing expenditure while not showing the same urgency toward expanding government revenues.
He said fiscal responsibility remains necessary, but warned that there are limits to how much government can reduce expenditure without affecting services and operations.
“We cannot cut our way into prosperity,” Kotai said. “At some point, we also have to generate more.”
One area he believes deserves closer examination is so-called SIN taxes, particularly taxes applied to alcohol and tobacco.
Kotai asked whether government has considered increasing or restructuring these taxes and whether the Ministry has calculated how much additional revenue such changes could generate.
He said consumption of these products remains relatively consistent and argued that government should examine whether there is room to increase revenue from them as part of a broader strategy to diversify public income.
Kotai stressed that increasing taxes on alcohol and tobacco would not, by itself, solve St. Maarten’s financial challenges. However, he said identifying new and sustainable revenue streams should receive the same attention government gives to cutting expenditure.
Profit Tax Rate Comes Under Scrutiny
Kotai also questioned whether St. Maarten’s current tax structure is properly balanced.
According to figures he cited during the debate, approximately 73.9 percent of government revenue is generated through taxes.
Profit Tax accounts for approximately 9.6 percent of tax revenues, or roughly XCG 46 million, while St. Maarten’s Profit Tax rate stands at 34.5 percent.
Kotai said the country continues to acknowledge that compliance remains a significant challenge and questioned whether the relatively high Profit Tax rate itself could be contributing to non-compliance.
He asked whether government has examined the possibility that a lower and more competitive Profit Tax rate, combined with stronger enforcement and a broader compliant tax base, could ultimately result in higher collections.
“When do we examine whether a lower, more competitive rate, coupled with stronger enforcement and a broader compliant tax base, could actually result in better collections?” Kotai asked.
Kotai Questions Balance Between TOT and Profit Tax
The MP contrasted Profit Tax collections with Turnover Tax, noting that TOT accounts for approximately 36.8 percent of tax revenues, or around XCG 176 million.
Kotai pointed out that government collects approximately XCG 176 million through TOT at a five percent rate, compared with approximately XCG 46 million through Profit Tax at 34.5 percent.
He said the comparison raises questions about whether maintaining comparatively high tax rates necessarily produces stronger revenue collection.
Kotai wants government to determine whether the present Profit Tax rate is discouraging compliance or weakening St. Maarten’s competitiveness within the region.
He also asked whether the Ministry of Finance has modeled what a lower Profit Tax rate, combined with stronger compliance and enforcement, could mean for total collections.
The MP further called for a long-term strategy to reduce the country’s heavy dependence on Turnover Tax and Wage Tax and create a more balanced revenue structure.
Kotai said the continued discussion surrounding tax reform must now produce decisions, timelines and implementation.
For businesses and residents, he said, the key question is no longer whether the existing tax system requires change, but when government intends to deliver that change.
“Consideration without a timeline, clear deliverables or a pathway toward implementation does not provide Parliament or the public with any certainty as to when action will actually be taken,” Kotai said.
