THE HAGUE – The Dutch government is considering to compensate residents on Bonaire, St. Eustatius and Saba for a loss of purchasing power due to rapidly rising prices and a negative adjustment of the tax-free amount.

This is what State Secretary Marnix van Rij writes in a letter to the House of Representatives. Van Rij with his letter answers questions from the Second Chamber in response to reports in the media in the Caribbean Netherlands that citizens will pay more tax and their purchasing power would decline.

“I would like to emphasize that the Cabinet aims to reduce costs and improve incomes for the residents of the Caribbean Netherlands. In that context, an increase in the statutory minimum wage (WML) and benefits has been implemented as of 1 January 2022. This concerns an increase of 10% (including inflation adjustment). Moreover, in the coalition agreement, EUR 30 million has been made available on a structural basis to, among other things, strengthen the labor market in the Caribbean Netherlands, fight poverty and increase livelihoods,” writes Van Rij.

Van Rij also writes that it is true that citizens will pay more tax. As previously indicated by the Dutch Caribbean Tax and Customs Administration (B/CN), this is due to a combination of circumstances, including negative inflation for the year 2020, which has a delayed effect.

Tax free amount

Like B/CN, Van Rij points to the fact that the adjustment of the tax-free amount is automatic and that, as in other years, no separate announcements have been made about the development of the tax-free amount. Incidentally, the minister is considering doing this every year from now on.

Compensation

Important in Van Rij’s letter seems that the Dutch Cabinet would be considering to  compensate residents Caribbean Netherlands for the decrease in purchasing power. “The cabinet will discuss this with the island governments and other stakeholders.” And: “That is reason for the cabinet to consider whether compensation can be offered for this, in anticipation of structural measures”.

Incidentally, not only citizens, but also local authorities were surprised by the negative development of purchasing power. The Executive Councils of Bonaire and Saba took up their pen to protest against the state of affairs and the fact that they had not been consulted about matters that could negatively affect purchasing power.