Appearances are deceiving
By Terrance Rey
A Dutch friend of mine was once amazed at the size of my house. He concluded that I must be rich. In the Netherlands he lives two floors high in a flat. I drive a jeep, he rides a bicycle. One might think that we only live in villas here. But that’s all appearances. The reality is very different. On Sint Maarten people often speak of ‘property rich but cash poor.’
I often hear people say that if you have land, you can easily get a loan from the bank. After all, you can use the land as collateral. But my bank manager once said to me: “The bank is not in the land business.” If you do not have cash flow in the form of a fixed monthly income or a business, you often do not qualify for a loan from the banks.
Even worse if you don’t have a permanent employment contract with your employer. Most of the workers on the island work on a temporary contract. The infamous ‘6-months contract’ is a well-known phenomenon here on the island. The big disadvantage of this is that you cannot take out a mortgage to buy a house. A family that does not own a house, but lives in a rented house, is forced to spend a lot of money every month on rent and other costs without getting anything in return.
Home ownership is usually only reserved for people with a permanent contract. Or those who have inherited a house or land. The latter, in particular, can get people in trouble. You can inherit a big house from your parents or family, but if you don’t have the money to pay inheritance or transfer tax or even land lease tax, then you have a big problem. The same applies to many people who have inherited government land: they are often unable to pay the annual lease fees.
See here a drama that is taking place now that the government is looking for people who do not pay their land lease fees. People get into financial trouble. Or they lose their government long lease land. Imagine a beautiful house built on it. A house that may have been built with the help of family and friends. It used to be called Jollification back in the day. The government doesn’t have the money to buy that house at all. So that house goes up for auction. How rich are you really then?
Appearances can be deceiving. Don’t draw conclusions from the wealth you see on the island. Those beautiful houses can be a facade. The tax compliance rate on the island is estimated at 35%. That percentage is not so low for nothing. The poverty on the island is invisible. The economy provided sufficient cash flow so that people can put bread on the table every day, but there is no money for long-term investments or paying taxes.
People on Sint Maarten seem rich, but that is not the case at all. Most of them have a huge lack of money. We are only good at short-term survival. There is no durability at all for long-term survival. This has been made poignantly visible during the pandemic. More than 14,000 people were eligible for food packages. If the economy does not recover soon, the number of people who will need food baskets will only increase.
It is already known that next year the government will still need liquidity support from the Netherlands. The question is how long can we keep this up? Time for the government to start taking measures that increase the sustainability of citizens. By promoting home and land ownership, creating permanent employment opportunities and increasing workers’ purchasing power. And as a last resort to strengthen the sustainability of the economy, banish corruption, nepotism and self-enrichment at the expense of society.
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Column originally published online in Dutch on DossierKoninkrijksrelaties.nl
