GREAT BAY--Member of Parliament Raeyhon Peterson has called on government to seriously examine the introduction of a capital gains tax on real estate transactions, questioning how St. Maarten continues to attract major property developments and multimillion-dollar investments while allowing substantial profits to be generated and transferred without adequately capturing revenue for the country.
Speaking during Wednesday evening's continuation of the 2027 national budget debate, Peterson challenged the government's approach to real estate investment, arguing that the economic benefits of development must be weighed against the financial demands placed on public infrastructure, utilities and residents.
The MP identified real estate as a major economic activity that he believes is not contributing enough to government revenue, particularly when properties are purchased, resold or transferred through offshore corporate structures.
He questioned why government continues exploring additional taxes and fees that could affect ordinary residents when potentially substantial revenue remains available from property transactions involving investors who may not reside or pay income taxes in St. Maarten.
Peterson argued that the country has long promoted its favorable tax environment as an incentive for international property investment, but questioned whether that approach continues to serve the best interests of the population.
Questions Offshore Companies and Profits From Condominium Sales
The MP outlined how he believes certain real estate transactions are structured to generate substantial profits without corresponding tax contributions to St. Maarten.
Using a hypothetical example, Peterson described an investor purchasing a condominium through an offshore company for approximately US$800,000 and subsequently transferring or selling the investment through another offshore entity for US$1.5 million just eight months later.
He questioned whether the country receives an appropriate share of the financial gains generated by such transactions, particularly where ownership arrangements involve companies registered outside St. Maarten.
Peterson also expressed concern about developments initially presented as hotels but subsequently marketed or operated as condominium properties.
He suggested that these arrangements deserve greater scrutiny, particularly when units are purchased primarily as investments rather than residences or conventional hotel accommodations.
The MP questioned whether existing legislation adequately addresses transactions involving offshore ownership structures and whether government has the necessary mechanisms to identify and tax profits arising from the sale or transfer of local real estate interests.
His argument was that while St. Maarten provides the location, infrastructure and economic environment that make these investments attractive, the financial benefits may flow disproportionately to investors operating outside the country.
Construction Activity Does Not Tell the Whole Economic Story
Peterson also challenged the frequently cited argument that major real estate developments automatically generate substantial benefits for the local economy through construction activity.
While acknowledging that building projects create employment and economic activity, he questioned how much of the money associated with these investments actually remains in St. Maarten.
Drawing on his own experience as a property owner and his familiarity with the real estate sector, Peterson noted that a significant portion of construction materials used in major developments is imported.
He argued that this limits the amount of investment spending that circulates through local businesses and the wider economy.
The MP suggested that government should assess the full economic impact of large developments rather than focusing primarily on their construction value or the number of units being built.
He questioned whether the revenue generated through employment, permits and other economic activity adequately compensates the country for the additional demands these developments place on public services.
Peterson pointed specifically to the need for roads, electricity, water and other infrastructure to accommodate new properties and their occupants.
These facilities, he argued, must ultimately be maintained and expanded within a country already struggling to finance essential services.
The MP questioned whether it is reasonable for residents to continue carrying much of that financial responsibility while investors benefit from the country's infrastructure and favorable investment conditions.
Airbnb and Short-Term Rental Revenue Also Under Scrutiny
Peterson extended his concerns to the growing use of condominium units and other investment properties for short-term vacation rentals.
He questioned whether income generated through platforms such as Airbnb is being adequately monitored and taxed, particularly where the property owners are based overseas.
According to the MP, investors can potentially benefit from multiple income streams, including rental earnings and subsequent profits from property sales, while government may not be collecting the full revenue to which it could be entitled.
He urged the Minister of Finance to examine the taxation of short-term rental income alongside the broader question of capital gains.
Peterson's position was that property owners who generate commercial income from St. Maarten should contribute appropriately to the public services and infrastructure supporting their investments, regardless of where those owners reside.
Revisiting Earlier Proposals for Condominium Taxation
The MP recalled that proposals involving condominium-related taxation had previously been discussed in St. Maarten, particularly during the period between approximately 2010 and 2015.
He questioned why those discussions had not resulted in a lasting policy and suggested that government revisit the earlier work.
Peterson acknowledged that proposals introducing additional taxation on real estate profits may not be welcomed by developers and investors.
However, he argued that the possibility of opposition should not prevent government from examining whether a more balanced system could generate revenue for national development.
He emphasized that the Minister of Finance has a responsibility not only to manage public expenditure but also to examine opportunities for strengthening the country's revenue base.
For Peterson, the absence of a capital gains tax deserves particular attention at a time when government is discussing new charges and revenue measures to address its financial constraints.
Development Must Benefit the People Who Live Here
Peterson also placed the real estate discussion in the context of St. Maarten's experience with Hurricane Irma and the financial challenges residents have faced in rebuilding their lives and communities.
He questioned whether investors who benefit from the country's development opportunities carry a proportionate share of the long-term costs associated with maintaining the destination.
The MP argued that the people who live and work in St. Maarten, including those who have endured natural disasters and periods of economic hardship, should not be expected to shoulder an increasing financial burden while substantial profits are generated through local property investments.
He made clear that his concerns were not intended as a rejection of investment or property development. Rather, he questioned whether government's existing approach sufficiently protects the country's economic interests.
