Support for higher tax free sum on BES islands

THE HAGUE--The amendment of the Dutch Labour Party PvdA to raise the tax-free sum in Bonaire, St. Eustatius and Saba by US $750 per year stands a very good chance to be approved by the Second Chamber today.

The PvdA proposed to raise the annual tax-free sum (belastingvrije som) from US $9,000 to US $9,750 in the income tax law which will go into effect per January 1, 2011 as part of a new fiscal regime for the islands. To pay for this tax reduction, which will be especially beneficial for the lower and middle incomes, PvdA suggests increasing the property tax (vastgoedbelasting) from 20 to 25 per cent.

Caretaker Finance Minister Jan Kees de Jager didn't advise against the amendment that was submitted by PvdA Member of Parliament (MP) Jeroen Recourt and handled during Wednesday's debate on three fiscal laws for Bonaire, St. Eustatius and Saba. This means that the Minister has no objections to the amendment.

The Minister advised against the other seven amendments. He said the introduction of succession tax on the islands, as proposed in the amendment of the Socialist Party (SP), would yield extremely limited revenue and as such it wasn't worth it.

The Minister objected to the introduction of a profit tax of 15 per cent, an amendment submitted by SP. He said that the current proposal to have companies pay a property tax was a better guarantee that the private sector paid taxes. He explained that, contrary to profit, real estate could not be moved to another location or to islands in the region with a lower tax burden to avoid paying taxes.

De Jager brushed off concerns of MP Ronald van Raak of the SP that, without a profit tax, Bonaire, St. Eustatius and Saba would unfairly compete with Curaçao and St. Maarten which he said planned to introduce a 15 per cent profit tax.

The Minister repeated his statement of last week's preparatory legislation meeting that every company in Bonaire, St. Eustatius and Saba would be paying taxes and that there would be no exceptions, even for a company like NuStar in St. Eustatius and the medical school in Saba.

De Jager said he had never seen a letter of Antillean Finance Minister Ersilia "Zus" de Lannooy to which Van Raak keeps referring which stated the intentions of Curaçao and St. Maarten. He said he found it "hard to believe" that Curaçao with its large private sector would want a 15 per cent profit tax.

The four amendments of the Party for Freedom PVV to raise the tax burden to the same level as in the Netherlands were not a good idea either, said the Minister. He said the amendments would hurt the already fragile economy of the three islands. He said the idea was to stimulate economic activities so the islands could stand on their own feet as much as possible.

The "Robin Hood" amendment of MP Ineke van Gent of the green left party GroenLinks whereby citizens with a lower and middle income would pay less tax and the private sector more didn't have De Jager's approval either. He said the amendment meant a more complicated tax system, which was exactly what the islands and the Dutch Government didn't want. "It is a very complicated labour reduction. Her amendment cycles the opposite way," said the Minister.

More positive was the Minister on the amendment of Recourt of PvdA. He said the proposal to adapt the income law to raise the tax free sum by US $750 and to increase the property tax by five per cent didn't hamper the simplicity of the fiscal system. He said the amendment would also benefit the lower incomes and would have the support of the island governments.

Van Gent and Van Raak were unpleasantly surprised by the amendment of fellow opposition member Recourt. Van Raak said the left parties were frustrating each other's efforts to realise social legislation. Van Gent said Recourt's amendment was nothing more than a "tiny midget step."

Ven Gent submitted a motion to have the Dutch Government draw up an annual spending power picture for Bonaire, St. Eustatius and Saba. She said it was important to make sure that the people with a lower income didn't suffer under the new fiscal regime. She withdrew the motion after De Jager indicated that this would be arranged through the Ministry of Social Affairs.

MP's Helma Neppérus of the liberal democratic VVD party and Madeleine van Toorenburg of the Christian Democratic Party CDA praised the simplicity of the proposed new fiscal regime which in their view would stimulate economic activities and result in more financial autonomy.

Neppérus agreed with De Jager that the property tax guaranteed a more steady, dependable revenue flow. Van Toorenburg said the new system was "clear" and "balanced" with everyone paying its fair share. "It may be paradise over there, but that should not count for the fiscal regime.

MP Cynthia Ortega-Martijn of the Christian Union (CU) asked De Jager to set up an intensive PR campaign to get the people on the islands acquainted with the new fiscal regime. The Minister promised to do so immediately after the new fiscal laws went into effect on January 1, 2011.

Ortega-Martijn submitted a motion to execute a so-called zero-measurement to determine whether the administrative burden of the fiscal legislation was in balance with the limited size of the islands. She further asked the Minister why there was no allowance for day care facilities on the islands. "This is especially important for single working mothers," she said.

The new fiscal regime in Bonaire, St. Eustatius and Saba will have to yield about US $50 million in taxes, which is more or less the same as under the Antillean tax laws. The islands have some 10,000 tax payers. The islands become part of the Netherlands per October 10 as so-called "public entities."

Today the Second Chamber will vote on the three law proposals, the fiscal system (Wet Belastingstelsel BES), the Implementation Law (Invoeringswet BES) and the Customs and Excise Law (Douane en Accijnswet BES). The eight amendments will also be voted on today.

7 October 2010

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