PHLIPSBURG- In an so-called Country Report, the International Monetary Fund (IMF) writes about an impending tax reform on St. Maarten, made urgent because of the effects of hurricanes Irma and Maria, as well as the Covid-19 pandemic.
“Sint Maarten’s economy has been hit hard over the last 4 years. In 2017, two major hurricanes struck the island causing significant damage. While reconstruction was largely financed by insurance proceeds and grants from The Netherlands, economic recovery from the hurricane damage was slow and in early 2020 the coronavirus pandemic shut down most of Sint Maarten’s tourism sector”, according to the report.
The IMF mentions that, as a result, fiscal revenue declined by 15 percent since 2016; payroll tax revenue declined by only 4.5 percent, whereas the turnover tax revenue declined by 23 percent.
Since April 2020, The Netherlands has provided immediate financial support to cushion the economic shock of the pandemic. In December 2020, Sint Maarten concluded an agreement with The Netherlands to receive more substantial financial support for recovery and ensuring long-term fiscal sustainability.
In return, notes IMF, the authorities have committed to make structural changes to their tax system, making it more growth-friendly and equitable, while optimizing and ensuring its revenue mobilization capacity.