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Editorial - Don’t kill the goose

All indications are that measures to raise revenues and/or cut expenditures will result from the budgetary instruction the Kingdom Council of Ministers is expected to issue for St. Maarten on the advice of the Committee for Financial Supervision. Prime Minister Marcel Gumbs had stated earlier that several amendments to add 15 million guilders to this year’s budget were at Parliament, but the general public is yet to learn what’s in store.

Rumours in the past that a hike in the turnover tax TOT was being considered have always been denied. Hopefully, that will continue to be the case, because under the circumstances increasing this cumulative and, according to some, destructive levy is hardly advisable.

The island is at the depth of a difficult low tourism season that so far has seen two business days lost in August due to storms. Such an extra levy now would anyhow apply to 2015 only for a maximum of four remaining months and the additional burden is likely to be passed directly on to consumers.

The latter also means becoming more expensive for visitors who drive the local hospitality industry, with the risk that the destination prices itself out of this increasingly competitive market. Whatever substantial added cost to guests therefore will have a negative impact on the one-pillar tourism economy and consequently could even backfire in terms of income for government.

The investment climate already does not appear to be that great at the moment, judging from the fact that only 77 of the 2,022 business licences approved before January 1 were collected (see Saturday paper), despite repeated announcements that the rest would discarded. It might be interesting to find out why many who requested one did not bother to collect theirs.

One theory is that applicants when picking up the permit must have a so-called CRIB number to pay taxes. There could be some hesitation there, perhaps not so much because the entrepreneurs in question don’t want to meet their responsibility, but due to less-than-positive experiences with the levying and collection of taxes on the Dutch side.

Improvement in that regard is probably the single most important change needed in the long run, also to enhance fiscal compliance. However, that does not solve the short-term problem and it looks like something will have to give.

Be that as it may, great care should be taken to make sure the goose that lays the golden eggs is not butchered in the process.

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