Wholesalers sound alarm over effect turnover tax

POSTED: 09/11/12 12:31 PM

St. Maarten — As the first wholesaler is (reportedly) preparing to shut its doors for good, potentially leaving several people without gainful employment at least in the near future, the sector is sounding the alarm bell for the umpteenth time, the hospitality and trade association SHTA stated in a press release issued yesterday.
Continued downturn in economic activity, uncertainty regarding the proposed new tax-system, served on a bed of a relatively high tax burden due to the low overall tax-compliance (36% reportedly), followed up with a proposed increased rigidity as opposed to more flexibility in certain labor laws, and the continuing rise in (local) cost of doing business brought the Wholesalers Division of the SHTA together last Thursday.

This section of the supply-chain – more than any other sector in the market – is, and always has been unfairly affected by the implementation of the turnover tax, the SHTA stated. “It gives any company interested in doing business direct from outside St Maarten an unfair advantage that is – in hard numbers – at least as large as the percentage in turnover tax. And the higher the turnover tax the bigger the unfair advantage is. Unfair because unlike the locally based wholesalers; companies based abroad do not pay a business license fee, do not pay any taxes into our government’s coffers, do not store any goods locally (leaving the population in a lurch when swells hit the port and goods cannot be off-loaded in time) and do not employ anyone on the island, thereby not contributing to the local purchasing power either.”

“We warned government prior to the temporary introduction of the turnover tax in 1998 that this tax would have detrimental consequences for the economy of St. Maarten. Always when the economic activity is good on a whole it’s easy (for government) to ignore the warning signs. Clearly our warnings throughout the years have not been heeded; rather on many occasions we’ve seen increases in the tax, the last being the temporary increase to 5% early in 2011,” the SHTA stated.
“Slowly we have seen our economic base being eroded, even though the economic activity was still good on a whole, but no changes were made to the turnover tax, rather we’ve had to contend with insinuations that the business community doesn’t want to pay tax and are in general evil persons,”
“We wonder what alternative employment government has to offer our combined approximately 500 employees when all of the local wholesalers are forced to cease operations because of the continued unfair advantage given to outside businesses, let alone the self-imposed rising inflation due to the cumulative effect of the turnover tax.”

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