Published On: Mon, Mar 25th, 2013

New sales tax tariffs debated

Curacao ParliamentWILLEMSTAD--There were many questions during the discussion in the Central Committee of Curacao’s Parliament on the changing of the ordinance regarding the OB sales tax, about the effectiveness, the control aspect and the definition of various products when introducing the proposed “differentiation.”

Through the amendment the Hodge cabinet wants to introduce various OB-rates of 0, 6, 7 and 9 per cent. Coalition member Humphrey Davelaar (PNP) applauded the move, especially because the zero-tariff will be applied on bare necessities and 9 per cent on unhealthy items. He believes people will consequently adopt a healthier lifestyle, but also advocates studying which products are actually considered luxurious and unhealthy to end up in the 9 per cent category.

Several parliamentarians, including opposition members Amerigo Thodé (MFK) and Omayra Leeflang (PAR), endorsed the latter. There are questions about cosmetics and the difference in quality of the essential foods. The current lists are not adequate, according to these parliamentarians. Independent (former PAR) parliamentarian Glenn Sulvaran, who supports the current government, asked what the exact difference is between the new list of exempted products and the list of basic commodities in the national ordinance of 1999.

There were also many questions on including the guest tax in the sales tax. Leeflang wondered how government can guarantee that the differentiation of the sales tax will actually yield 16.5 million guilders, considering that the explanatory memorandum of the draft national ordinance literally states that the sales tax increase of last year had not produced the estimated revenue. She also mentioned a letter from the interest group for Curacao’s import agencies BVCA, calling it incomprehensible that the government decides to levy 9 per cent on certain articles in a manner that is very difficult to control from a technical point of view.

Leeflang asked if government had considered the consequences for the purchasing power of the middle classes, as the draft national ordinance mentions that lower income groups would be spared. Finally, she mentioned several issues raised by various storekeepers in the inner city, among which their fear of less income because they sell luxury products. They think they will lose customers to duty-free shops on cruise ships and at the airport, as well to other islands with more attractive prices. This could in turn lead to personnel losing their jobs and consequently saddling the government with another problem.

Downtown Management Organization (DMO), the Association Business Community Curaçao VBC and BVCA presented alternatives, such as increasing excise taxes, and wondered why these were not considered.

Coalition partner Alex Rosaria (PAIS) took his time to explain that the measure was due to the “disastrous policy” of the previous Minister of Finance George Jamaloodin (MFK). He too thinks eventually economic development is a better way to generate more revenues.

Another point he and several other parliamentarians raised was the control factor, pointing out the weak links in the collection of taxes. On behalf of PAR, both Zita Jesus Leito and Leeflang pointed out that a differentiation of sales tax leads to administrative complications for entrepreneurs and monitoring authorities.

The Minister of Finance had already announced that the OB-differentiation wouldn’t become effective until April 1, but it now seems that the public session to approve the draft legislation is scheduled for April, said Sulvaran. According to him, the implementation date is now May 1.

Source: Dutch Caribbean Business

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