The free allowance for Bonaire, Saba and St. Eustatius for 2012 will be increased with 8.2 million dollars to 42.9 million dollars. Furthermore, there will be catching up for essential basic services like drinking water, waste processing, airport security, education housing and libraries. That is what Minister Spies (Interior and Kingdom Relations) writes today in a letter to the Lower House.
The free allowance for the Dutch Caribbean islands is comparable with the general allowance to the Dutch municipalities from the municipal fund. The adjustment of the amount of the free allowance follows after studying the amount of the free allowance in relation to the tasks that need to be performed by the islands. The Cabinet draws the conclusion from the study that the increase of the free allowance from 34.7 million dollars to 42.9 million is a reasonable point of departure. Bonaire will get an increase of 4.9 million dollars to 24.9 million dollars. St. Eustatius will get and additional1.3 million and will receive 9.2 million dollars from now on. For Saba it is an increase of 1.2 million dollars to 8 million. Furthermore, 800,000 earmarked dollars have been made available to tackle social-economic problems.
The islands also have their own responsibility. The levy and collection of island taxes can be improved. Also new sources of income can be tapped into. St. Eustatius and Saba, for example, contrary to Bonaire do not levy land tax (comparable to the OZB or property tax in the Netherlands). The tax burden on the residents and businesses of the islands must be taken into account, however.
Upon request of the Ministries of Finance and the Interior and Kingdom Relations, Ecorys (NL) and Curconsult (CUR) have investigated the purchasing power in the Dutch Caribbean. In that survey the underlying causes to the relatively steep price increases that occurred in 2011 in the Dutch Caribbean, were analyzed. It was found that the price increases are associated to several factors, but that the price increases measured, as such, are easily explained.
Major cause for the price increases in the Dutch Caribbean, are the increased prices on the global market of food, raw materials and consumables, including fuel. In addition, the switch from the Netherlands Antillean guilder to the US dollar has been seized by retailers and restaurants to round off prices in US dollars upwards to ‘psychologically’ or easily manageable prices. The introduction of the new tax system in the Dutch Caribbean has only had a limited effect on the price increases.
Part of that effect, moreover, results from incorrect application of the ‘algemene bestedingsbelasting’ by especially small businesses. The latter has led to their clients paying more (tax) than necessary. Through additional information the Tax Authority / Dutch Caribbean will try to reduce this incorrect application, so prices may decrease a bit again. The confluence of the new tax system of the Dutch Caribbean with the tax system in St. Maarten and – to a lesser extent – Curaçao – has contributed to the price increases in the Dutch Caribbean because in certain cases there is double indirect taxation. St. Maarten should enter into an agreement that enables residents of St. Eustatius and Saba and the businesses established there to purchase (durable) consumer goods duty free in St. Maarten. Between Bonaire and Curaçao in most cases trade can be conducted duty free.
The purchasing power survey also found that the change in the tax system has resulted in almost everyone seeing a net improvement. This does not apply to people who did not pay (and do not pay) (wage or income) tax, including many part-timers. As for businesses, applies that particularly the income of small business has been under pressure.
Minister Spies also wants to see if matters cannot be arranged in a simpler and therefore cheaper manner for the islands. Therefore, a study will be conducted on the reduction of responsibilities and deregulation, including the consideration of potential savings.
Press release RCN June 11, 2012
Update June 12, 2012
RCN has released 4 documents with background information on the “vrije uitkering”. Unfortunately they are all in Dutch. Yoe can download the through the links below.