New debate about double turnover tax on fuel prices

PHILIPSBURG — Eight years ago, financial expert Emilio Kalmera pointed out how the government abuses the turnover tax-system by applying this levy twice to the price of gasoline and diesel: once to the wholesale price and after that to the consumer price.

This system is still in place, though Kalmera stated at the time that the government does not understand its own tax legislation. ”You can see how the government abuses the turnover tax as if it is a value added tax. Lord, have mercy.”

The tax system assumes that entrepreneurs pay turnover tax to the government. They are not allowed to add this tax to their sales price but this is exactly what the government is doing with the fuel prices.

The Ministry of Tourism, Economic Affairs, Traffic and Telecommunication published the composition of the fuel price recently when it announced a price hike per June 2.

This shows that the base liter price for unleaded gas charged by Petrotin is 2.187 guilders. Four other components further increase the price: freight (6.3 cents), import duty (15.5 cents), liquid throughput fee (8 cents) and wholesaler margin (23 cents). This brings the maximum wholesale price to 2.715 guilders and to that amount the first 5 percent turnover tax is applied. It adds another 13.6 cents per liter to the price, that is now 2.851 guilders.

Remarkably, there is no insurance fee added, which indicates that the fuel that arrives on the island travels uninsured from the supplier to its destination.

That’s not the end of it, because retailers add their margin of 14.5 cent per liter to the price to set a maximum consumer price at 2.996 guilders. But wait, the government says, we also charge 5 percent turnover tax to that price. This adds 15 cents to the total and this is why the price at the pump for unleaded gas is now 3.145 guilders.

The total turnover tax component in the consumer price is therefore 28.6 cents. Add import duty and the total becomes 44.1 cents.

In April TEATT Minister Roger Lawrence spoke of a 14 percent reduction in the share the government takes from the fuel prices. The adjustments require changes to relevant legislation but the proposal reportedly had the support of the Council of Minister at the time. It would bring the 44.1 cent down by 6.17 cents to 37.93 cents and thus lower the price at the pump from 3.145 guilders to a bit over 3.08 guilders.

That is still a lot higher than the liter price of 2.822 guilders Lawrence introduced on April 12.

Turnover tax is the most important source of revenue for the government. The 2022 budget shows that the government expects to collect 141.6 million guilders ($79.1 million) this year, around 2.5 million ($1.4 million) more than it has budgeted for wage taxes.