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Thursday, 25 August 2016 18:57

Editorial TODAY Newspaper

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"A BIG NO-NO"

Finance Minister Gibson came out with a clear statement yesterday about flat rate and indirect taxes. That’s a big non-no, he said, and it won’t happen on my watch, because that approach only benefits the rich.

It is good to take note of this statement, because several political parties have made tax proposals  part of their manifesto and they present these plans without explaining what their effect on the people will be.

On the other hand, given the fact that tax reform is a process for the long haul, similar to constitutional reform, voters should not be too concerned that any of these tentative proposals will become a reality any time soon.

But the diverging opinions about these issues must make people wonder whether the parties that came up with these ideas know what they are talking about.

Published Thursday, August 25, 2016, in the Today newspaper

Finance Minister Gibson:

Flat and indirect taxes taxes only benefit the rich

Finance Minister Richard GibsonGREAT BAY – “Flat taxes and indirect taxes are a big no-no. I am totally against it because it is unfair to those who are less fortunate. This will not happen on my watch,” Finance Minister Richard Gibson said at yesterday’s Council of Ministers press briefing.

With his statement the minister reacted to proposals by the People’s Progressive Alliance (flat rate 10 percent income tax) and the United St. Maarten party (that wants to get rid of all taxes and replace them by a sales tax).

“Little do they realize that with a flat income tax rate you give a tax break to the rich,” Gibson pointed out. “If you remove income tax and all other taxes and only go to indirect taxes, all you are doing is reducing taxes for the rich.”

The minister pointed out that a sales tax would be included in all products. This way, people who are better off pay the same taxes when they buy for instance a chair, than someone with a much lower income.
“Indirect and flat taxes are totally unacceptable for the masses in our country because they put an unfair tax burden on them. Our tax system is progressive. The more you earn, the more your pay. That has to be maintained. Suggesting that everybody pay the same only benefits those who make more money.”

The minister referred to the tariffs for water and electricity that also follow a progressive pattern: the more consumers use, the higher the price they pay, thus subsidizing the cost of water for lower income earners.
Gibson said that the government is working on tax reform but that this has to be done carefully. “It has to have an effect that does not burden one group over the other in an unfair manner. It has to be a combination of factors. Some say: only sales taxes or, look at other islands that have no income tax. Yes, but in St. Kitts they put 17 percent on top of everything you buy. And people forget that such islands receive their revenue from import duties. Without it they would not have enough revenue”

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