ARUBA’s TAX REFORM Stage II

There are meeting these days between stakeholders and GOA regarding the Tax Reform.

Some of my friends say, kudos to GOA for giving the stakeholders an opportunity to voice their views.

Some say, you’re crazy, it would be suicidal, NOT to listen to the cash-cow private sector.

In December, the Kingdom of the Netherlands prepared a technical assistance report in which it outlined the policies needed to reach a SUSTAINABLE TAX SYSTEM 

This Technical Assistance report was prepared by a team of the International Monetary Fund. It was based on the information available at the time of completion, October 2018. 

It spells it all out regarding a Value Added Tax, Personal & Corporate Tax and Excise Tax, it’s a handbook to sober finances, in 69 pages.

The executive summary says it all:

Over the last decade, Aruba has faced three recessions resulting in a public debt of approximately 90 percent of GDP. Its current budget deficit needs to be reduced and Aruba should close a fiscal gap of 1.5-2 percent of GDP over the next two to three years to return to a sustainable path. Earlier this year, the authorities have introduced a crisis package, mainly by increasing the turnover taxes. This temporary tax measure should be replaced by a tax reform that will modernize and simplify the current system.

The new tax system should not only raise more revenue, but also shift the tax burden away from income and profits toward consumption. The current system is not well equipped to make these changes. In replacing the crisis levy, the Government sees an opportunity to streamline the current tax system, modernize it, and make it more sustainable for the future needs of Aruba.

This report provides an assessment of Aruba’s tax system, provides recommendations, and suggests a general time path towards a modern tax system. Key elements of the mission’s findings focus on simplification, a reduction in the multiplicity of tax instruments, and improvements in revenue productivity. The main areas that could benefit immediately from the mission’s assessment are the adoption of a value-added tax and a reform of the excise taxes. Other recommendations regarding the personal income tax and profits tax serve simplification purposes.

So, the Dutch are holding Aruba to those recommendation, twisting our arm, recommending the replacement of the BBO/BAZV/BAVP with a 10% VAT on EVERYTHING. But Aruba will probably try to do it its own way, because I heard very strong rumors about sticking to the BBO, implementing a soda tax, even on sugar free pop, and further leaning on the hotels for funding.

I did not hear any strong rumors about cost cutting, yet.

I wanna hear rumors about cleaning up the mess, raising accountability, diminishing corruption, introducing order into public finances and taxation, collecting from all those who are currently cheating, unloading superfluous public employees, and other good governance strategies.

Leaning further on the hotels is not a good idea. They are our lifeline and are already feeding us and keeping a roof over our heads. Let they make money, why not. If they weren’t making money here, they would leave!  

 

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September 06, 2019
Rona Coster
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Bati Bleki by Rona Coster
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Bati Bleki by Rona Coster
Bati Bleki by Rona Coster
Bati Bleki by Rona Coster