Tax fugitives
By Hilbert Haar
The National Gazette reads these days as a manual for tax payers on the run. Hundreds of pages in the government’s official publication are dedicated to the listing of companies and private citizens that have outstanding taxes and that are nowhere to be found.
In the Gazette publications issued between October 11 and December 20 I counted 1,439 such entries – give or take one or two because after sifting through this mountain of information my eyes started glazing over towards the end.
The message that strings all these announcements together is rather unsettling. None of these identified tax payers has a known address in St. Maarten or elsewhere. The tax inspectors cannot find these people and these businesses and they are therefore unable to collect what is due.
It is tempting to extrapolate the data from the last three months and declare that the number of tax refugees for the year must be four times as high. I don’t know because I do not have the stamina to read the endless announcements in all 2019-issues of the National Gazette.
What is clear from the numbers over the last three months is that the tax inspectorate – and the government with it – has a huge problem. If hundreds, if not thousands, of tax payers are able to duck their responsibilities, the government is missing out on a hell of a lot of money.
Maybe these tax refugees are not the largest contributors to the state’s coffers, but their numbers are impressive and extremely worrisome.
Other than that, the data also suggests that St. Maarten’s economy is in serious trouble. You don’t run from the tax office if you are able to meet your obligations.
All this brings the focus back to tax reform. To prevent a serious loss of revenue, the country ought to rethink its fiscal system and to take closer look at the quality and capacity of its tax inspectorate.
I am not a fiscal expert and I do not pretend to have all the answers, but I am prepared to hint at a possible solution with a reference to something I experienced in the United States as a poker player.
In the beginning of the century, poker players who won more than – if I remember correctly – $800 in a poker tournament had to fill out an IRS-form with the rather hilarious heading ‘certain winnings.’ The casino kept a copy and players were expected to file the original with their tax return. I never met a poker player who actually did that.
It was of course inevitable that the Internal Revenue Service would wake up to this sooner or later. These days, casinos are obliged to withhold the appropriate percentage of taxes from winnings. If they don’t do it, the IRS will come after the casino. To the chagrin of many a poker player, this system works like a charm – at least for the American tax inspectorate.
It is an approach our decision makers should give some thought and figure out a way to apply it to the business community and to all those tax fugitives who are currently laughing all the way to the bank.
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