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St. Maarten government scraps plans to increase Turn-over-Tax on tobacco and alcohol

THURSDAY, 08 AUGUST 2013

~ Write off of back taxes under review ~

PHILIPSBURG–Sellers of alcohol and tobacco products can breathe a sigh of relief as plans by government to increase the turnover tax (ToT) have been scrapped from the amended 2013 budget.

Plans to write off back taxes up to December 2006 also may be shelved by the Wescot-Williams III cabinet. Finance Minister Martin Hassink is evaluating the way forward and will present his recommendations to the Council of Ministers.

Prime Minister Sarah Wescot-Williams (DP) confirmed on Wednesday during the Council of Ministers press conference that the revised budget would not have the planned tax increase, a measure proposed by the former National Alliance (NA)-led coalition.

The main reason for not going through with a two per cent increase to ToT is that the legislation to make the increase and the collection possible is not ready. Furthermore, even if government manages to make legislation ready, levying the increase will make no sense with less than six months left in the year.

The amended budget has been approved by the Council of Ministers and is now under review by the Advisory Council. Parliament will receive the budget once the Advisory Council completes its task.

Wescot-Williams declined to say what revenue-increasing measure new Finance Minister Martin Hassink (UP) has come up with to fill the NAf. 15-20 million gap in the budget that former Finance Minister Roland Tuitt had projected the increase would have added to government’s coffers.

The planned ToT increase was met with outcry from the business community and Members of Parliament (including members of the former NA/DP/Independent 3 coalition) who were concerned about the implications for St. Maarten’s image as a duty-free destination.

The St. Maarten Hospitality and Trade Association (SHTA) was very vocal about the negative impact of the ToT increase on the cost of alcohol and tobacco products. SHTA President Emil Lee had written to then-president of Parliament Rodolphe Samuel in April, prior to the passing of the 2013 budget by Parliament, about the repercussions of the revenue-increasing measure.

Lee had pointed out that since the inception of the ToT, which stands at five per cent for general purchases, as a “temporary emergency measure” in the late 1990s, it has been a detriment to local businesses. “The detrimental effect on the economic base of this tax is undeniable.”

The proposal to increase ToT on alcohol and tobacco products was seen by SHTA as “the first step in crippling St Maarten’s competitiveness as ‘the Duty-Free Shopping Mecca of the Caribbean’.”

Democratic Party (DP) MP Leroy de Weever also took issue with the planned increase. He pointed out to the then-government during the budget debate in April that it should be lobbying for an increase in the value of tax-free gifts US residents and others can take into the United States and in the number of duty-free bottles of alcohol.

He warned then that if the country could not compete with the prices on board the cruise ships as well, this would lead to the death and decay of Philipsburg and the country’s economy as a whole.

MP Roy Marlin (DP) said during the same debate that part of the revenue government was attempting to raise via the alcohol and tobacco tax could be covered by the implementation of the residence permit fee, as proposed by then-Justice Minister Roland Duncan.

MP Jules James (UP), then in opposition, had expressed worry that the increase would lead to layoffs in the wholesale sector where the ToT increase was to take effect.

Bron: The Daily Herald, St. Maarten

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