Ten point position paper hospitality sector – SHTA suggests gas-tax to fund tourism plans

POSTED: 11/2/12 1:52 PM

St. Maarten – A good tax policy must be competitive; it must broaden the base and lower the overall effective rate. We all recognize that we are competing with others in the region for limited investment dollars and for an annual inflow of visitors. Our tax policies should reflect this.”
Thus begins the ten point position paper of the Hospitality and Trade Association SHTA that was submitted to Prime Minister Wescot-Williams on Wednesday. The paper discusses “the ten most pressing social and economic ills” that affect the community. It addresses amongst others taxes, destination marketing, labor, education, cooperation with the French side, and renewable energy. Other points are finding a balance between the size of the economy and the size of the government, stimulating business in Philipsburg and corporate governance and accountability.
The private sector wants to eliminate uncertainty and urges the government to establish the parameters for a new tax policy. Broadening the tax base is an obvious priority, but the SHTA also asks to reduce the informal economy as quickly as possible. Another idea is to review tax compliance by businesses based on sector and matching the number of tax payers with the number of licensed companies and sole proprietors per sector.

An important concept seems the idea to consider an overall tax rate for businesses and citizens and to eliminate the ability of an single entity like Gebe, the airport, the harbor and TelEm to increase levies and tariffs without the approval of parliament and without a supporting analysis of the impact on the cost of doing business and the cost of living. Information sharing with the French side is also mentioned as a priority.
“Destination marketing and name recognition are crucial for the future development of St. Maarten’s tourism product, but also for the stability and the expansion of the economy, the position paper states. It proposes to put an interim structure in place until the St. Maarten Tourism Authority is in place before all winter bookings are made.

The paper furthermore suggests a gasoline tax of $0.01 up to $0.05 per liter to fund the development of new tourism product that will stimulate the low season. Hotel properties ought to get low interest loans and tax incentives to enable the financing of refurbishments and upgrades. “Older properties do not benefit from tax holidays on investments and rarely generate profits due to their competitive disadvantage,” the position paper states.

The private sector points to a disconnect between available jobs and education. This, together with the poorly performing economy is at the heart of high unemployment rates. “There is also a large disconnect between available jobs, wages and youth expectations.”
Possible solutions are controlling existing policies like immigration, understanding current labor needs and simplifying the work permit process. The SHTA also calls for a more flexible labor policy “that fits into the existing economic climate and at the same time safeguards the financial security of employees.”
The position paper notes that the size of the public sector should be in direct correlation to what the size of the economy can afford. “Government must in the short term strive to become more effective and efficient.”
The establishment of a Hospitality Training school and tourism awareness campaigns are other wishes of the hospitality sector. “Environmental awareness must be key to all of our educational programs from the earliest levels so that all residents embrace and preserve the beauty of our island.”
The SHTA also finds that the government has to work more together with the French side. “Use economies of scale to leverage utilities, waste management, law enforcement and healthcare and to attract funding for social and economic development projects.” Also, the SHTA says, the government ought to keep French side policies in mind in developing tax systems. “Allowing increases in container fees can create an imbalance in trade between the two sides.” As a last point, the SHTA mentions efforts to create joint marketing programs.
The hospitality sector also pushes for using renewable energy sources and for establishing an effective recycling program.

To stimulate business in Philipsburg, the position paper suggests establishing a parking authority, to reclaim existing government long lease land for additional parking facilities, and to ensure that zoning requires ample parking facilities in future buildings. Parking meters, improved street lighting, parking on the unfinished ring road, pedestrian bridges, longer opening hours for stores and increased presence of VKS and Soualiga patrols in the center are among the measures proposed.

The position paper stresses the importance of good governance and suggests the establishment of a Government Business Enterprise Act designed to ensure that government-owned companies operate based on best practices. Lastly, the paper suggests including all recommendation in a multi annual policy plan.

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