Ombudsman asked to investigate fairness of tax system
PHILIPSBURG — Citizen John A. Richardson has approached the Ombudsman in an open letter with a request to investigate the fairness of St. Maarten’s fiscal system. The letter addresses in particular the failure of the legislative branch to establish under which conditions taxes can be forgiven completely.
Richardson writes that the tax system treats pensioners unfairly, because the SVB-pension “is not a livable one” and because “any additional income is taxed more than proportionally.”
He refers to the tax collection ordinance of 1970 that authorizes the receiver to grant a postponement of payment. If payment is not possible, taxes can be partially of completely cancelled. However, this can only be done once it is regulated in a national decree holding general measures (routinely referred to as an LbHam).
“The legislative branch has not seen fit to write the general rules and conditions each taxpayer should meet if they are seeking a write off of their taxes,” Richardson points out.
The SVB-pension is indeed not a livable one. The full pension is currently 1,240 guilders per month, or 14,880 per year – well within the limits of the lowest tax bracket. This amount is taxed with 12.5 percent: 1,860 guilders per year or 155 guilders per month. It reduces the net monthly pension from 1,240 to 1,085 guilders, or $606.
“How many old people have nightmares knowing they have to taxes to pay and that the receiver is merciless?” Richardson wonders. “Completing paragraph 5 of article 6 of the collection ordinance would level the playing field and give more spending power and thus a better standard of living.”
Is the tax on additional income indeed disproportionate as Richardson states? Someone receiving a full regular annual pension of 14,880 guilders could generate another 17,247 guilders and still remain within the lowest tax bracket. Once that income exceeds the threshold of 32,128 guilders, taxes increase to 20 percent. In other words: of every one hundred guilders above this amount tax payers would keep only 80 guilders in their pockets. The top bracket of a whopping 47.5 percent only applies to those who earn more than 141,896 guilders ($79,272) per year.
In an article we published in February, tax attorney Natasha Manuela pointed out the importance of filing tax returns for citizens who one day become pensioners. Failing to submit consecutive tax returns will minimize the amount of pension they will receive later on in life.
Theophilus Thompson, President of the Windward Islands Federation of Labor Unions (Wifol) stated in an article we published in April 2019 that pensioners should not be paying taxes at all. “They have already contributed to social economic development and now they receive solidarity in return.”
In February, Member of Parliament Ludmila de Weever described our country’s tax system as “a little bit absurd” though her focus was mainly on its effects on the business community.
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Related article: Open Letter to the Ombudsman of Country Sint Maarten requesting an investigation into Taxes in Sint Maarten
