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Sunday, 28 August 2016 20:38

Opinion TODAY Newspaper

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"ELECTION RHETORIC"

USp-leader Frans Richardson strongly disagrees with Finance Minister Gibson on the issue of taxes. That happens.
But in his drive to disqualify the minister’s position, Richardson slips up when he says that “the small man” is burdened with an average tax levy of 35 percent.

First of all, that tax bracket does not exist. In the 2016 tariffs the brackets start at 12.5 percent and then go up to 20, 26.25, 33.75, 40 and 47.5 percent.

If we look at the tax bracket that comes closest to Richardson’s 35 percent, (33.75 percent) and consider the kind of income this concerns, it does not exactly represent “the small man.”

The 33.75 percent tax bracket begins at annual (taxable) incomes of 65,604 guilders; tax payers who make exactly that amount, are due 9,858 guilders in income tax, leaving them with 55,746 guilders to play with. That is a comfortable income of 4,646 guilders per month ($2,596).

The top of this bracket earns 98,392 guilders and pays 20,924 in income tax, leaving the tax payer with a disposable income of 77,468, or 6,456 guilders ($3,607) per month.

To call people at this income level rich is probably a stretch, but identifying this group as “the small man” is nothing less than ridiculous.

If we understood MP Richardson correctly, he is okay with the idea that the rich and the poor pay the same in taxes.
That is, and we agree here with Minister Gibson, unfair. The strongest shoulders should bear the heaviest burdens in our opinion.

Why? Because they can, while people at the bottom of the economic ladder have no maneuvering space at all.

We would like to see a detailed model of Richardson’s tax proposals and an audited assessment of its effect on all citizens. Then we know what we are talking about. Right now, we’re dealing mostly with election rhetoric.

Published Friday, August 26, 2016, in the Today newspaper

Frans Richardson says Minister is out of touch:

"Finance Minister acting as if poor is doing so great now"

PHILIPSBURG – The Leader of the United St. Maarten Party (USP) MP Frans Richardson on Thursday said Minister of Finance Richard Gibson is completely out of touch with the realities of St. Maarten by stating that an indirect taxation model will not happen under his watch.

"First I don't know which 'watch' the Minister is talking about, but it is clear that the Minister is part of an old way of thinking and not willing to listen and look at evolving like the rest of the world," Richardson said. He said the easiest thing to do is to "put direct taxation" on the small man, "burdening them while some of them pay an average of 35 percent wage tax on top of a debilitating ToT that is passed on to them."

Furthermore, Richardson added, Gibson seems to not believe in the middle class. "For the year our tax system has depleted the middle class. And, the Minister in stating that only the rich will benefit, acts as if the current system is so greatly beneficial to the poor. With a carefully studied and applied indirect tax model, rich and poor pay the same and, please note, that the so call "rich" consume more so they spend and contribute more," Richardson said.

Richardson also mentioned the positions of the Social Economic Council (SER) who points out that internationally the trend is to move away from direct to more indirect taxes.SER says the current model, including the turnover tax TOT, has shortcomings in compliance, the extent of coverage and economic impact. What’s more, the TOT of five per cent is also cumulative in nature, which several persons, including Finance Minister Richard Gibson, have called “destructive.”

For example, SER has advised the government to register all trade transactions at the ports of entry by quantity, generic type, value and owner by CRIB number. The data from this registration would facilitate both the level of compliance of existing taxation and the ability to judge the returns of investments to replace Turnover Tax with alternative and more effective indirect tax models.

MP Richardson went further and reminded Gibson of some of the statements and positions at the tax summit that he organized in June this year. At this summit, Secretary General of Finance Arno Peels and the Head of the Department of Fiscal Affairs Janio Chayadi gave a brief run down on the tax framework that has been approved by the Council of Ministers. Most notable message in this field was broadening the tax payers base by simplifying the regime, abolish undesirable regulations and a shift from direct to indirect taxes.

"Why is the Minister flip-flopping on taxation again as he has in the past with issues such as the Central Bank and Emsley Tromp. He clearly said at the summit, and I quote:

'Living on St. Maarten, going about our daily activities, relying on what has worked for many years in the past and expecting that it will be the same in the future is not thinking about the future. It is projecting the past into the future. Nobody from the richest 1 percent lives on the island. We don’t have billionaires like Warren Buffett, Bill Gates, Carlos Slim, George Soros or Larry Ellis.” Nevertheless, Gibson continued, tax reform and fiscal intervention are “absolutely necessary.'

"But today, the Minister is talking about the rich will benefit? Richardson said. Richardson added his party will sit with stakeholders to find the best indirect model for St. Maarten since obviously the current system isn't working.

Indirect taxes can be spread over a wide range. Very heavy direct taxation at just one point may produce harmful effects on social and economic life. As indirect taxes can be spread widely, experts feel they are more beneficial and suitable. The collection takes place automatically when goods are bought and sold. A dealer collects the tax when he charges a price. He is an honorary tax collector. Also, indirect taxes cannot be evaded as they are a part of the price.

USP Press Release

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