Aruba’s fiscal reform plans are disastrous

At the end of February 2022, our tax office, DIMP, held meetings with representatives of commerce and NGOs, during which they presented a general outline of the fiscal reform plan designed by a GOA-appointed task force.

This fiscal reform, as you know, would include a transition from the current taxation method to BTW, a consumption tax, a kind of Value Added Tax, and GOA’s proposal is to introduce a two-tier system, 6% of tax on food and non-alcoholic beverages and 18% on everything else, including restaurant dining.

There are some rumors also that 4% and 16% are considered with some import duty increases.

The NGOs have been collaborating with their own experts from among members of AHATA, ATIA, KvK, and CUA, that is the association of merchants, analyzing the proposed tax reform measures and their effects on the private sector, in order to provide GOA with feedback.

The NGOs have jointly sent THREE letters to GOA, seeking further clarity, outlining concerns, and offering suggestions.

So far, no response and you should know the truth, this will be disaster.

GOA is going to ‘decide’ tomorrow on the course of action, while being dishonest with constituents, because the main goal of the reform is to extract more money from the community. The reform doesn’t have the public in mind.

Its main concern is to increase GOA income.

And the Tax Department misrepresents the ‘compensating measures,’ such as a lower income tax, because the higher BTW far outweighs them.

They are misinforming us and will eventually claim that COMMERCE is the abuser, by keeping prices higher than necessary.

And our rubber-stamp Parliament is quiet.

They are not dealing with reality at all, just holding on to their jobs.

And not telling the public the whole truth, that the reason for the is to increase GOA’s revenues and AVOID cutting expenses, so they can, on the surface, comply with CAft.

By extracting the extra revenue from the public, they are making Aruba too expensive.

They are making political choices, and not wise ones.

Definitely not in the service the community.

To recap, some of the primary causes for concern:

The high BTW rate, 18%, will cause Aruba to become too expensive for residents and tourists; purchasing power will be reduced affecting commerce negatively.

GOA and the tax authority are underestimating Aruba’s soaring inflation, a global phenomenon, which the proposed BTW rates will inflate even further.

Companies unable to charge BTW, such as hotels or casinos, must be offered an alternative method to offset the BTW paid on all purchased goods and services.

MOST IMPORTANTLY: The reform plan MUST include a structural reduction of government expenses, in payroll, goods and services, to mitigate the tax burden on the community, in accordance to CAft’s recommendations. Our Dutch financial supervisors believe the reductions in GOA’s expenses play an important role on the road to financial sustainability.

The implementation on January 1, 2023 is RUSHED and unrealistic.

While the NGOs support the BTW as a concept, because with collection at the border, the compliance rate will improve, however, as recommended by the IMF, the reform plan should include a BTW with a broad base, preferably a single rate, introduced over time, and the elimination of various other taxes. The plan according to the IMF should also include reduction of government expenses and increased efficiency of the tax office.

COALITION MEMBERS: You don’t have to go along with the plan, you have options.

 

 

 

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May 12, 2022
Rona Coster