At the end of September, the Minister of Finance published our upcoming, much-awaited Plan di Impuesto, 2023.
What started as an ambitious call for reform ends up as just more of the same.
Which didn’t prevent the minister from hailing it as a simpler more-just approach.
The business community did not take this let-down lightly.
The so-called simpler more-just approach will raise prices, increase the cost of doing business, and squeeze the business community – which is already compliant, while leaving the gray market economy, untouched, unrestrained.
The plan will not solve any of the systemic challenges of our complicated tax system.
This is a band-aid, while we require a root canal.
To soften the impact, the minister posted an encouraging note of her FB wall: Appreciate the little things in life, she meditated, which make life worth living.
Totally.
She has continued posting daily light-hearted musings, focusing on the great advantages of the upcoming Plan di Impuesto, 2023, with built in compensations.
Compensations benefiting Individuals and Companies.
But alas, none of the so-called compensations make up for the extra tax burden.
In one such posts, our minister was overjoyed to report that BBO hasn’t gone up in a long time – she must have forgotten that BAZV and BAVP, now complement BBO. Those have been added over the years.
So, it’s true, while BBO did not increase, it had pesky kids.
Retirees will be getting an additional tiny amount, the minister promised, which will not even cover the increase in utilities.
And finally, the great news that 33.161 locals will be income-tax exempt.
I don’t think we can trust that number, appearing in the minister’s crystal ball.
Having reviewed that Plan Di Impuesto 2023, the Aruba Hotel & Tourism Association published a disapproving press release. The association is extremely concerned about the negative effects of that plan, on Aruba. According to President and CEO of AHATA, the plan is a kind of “mandatory fundraiser” that collects more funds from already compliant tax-payers — and neglects to encourage compliance in tax-evading circles.
I am paraphrasing.
The press release states that the published plan lacks detail, and its total effect is unclear. AHATA would like to sound the alarm — probably so GOA doesn’t interpret silence as acceptance.
AHATA believes that GOA’s focus is wrong.
It aims at collecting enough funds to sustain its inefficient institutes, and burden the community instead of reducing its spending, structurally.
GOA should create more efficiencies, and implement an aggressive plan to identify tax-resistant pockets, representing a large number of non-compliant locals.
AHATA goes on to explain that the tax plan burdens the business community which will result in higher expenses for companies and consequently higher prices of goods, and a higher cost of living here.
The elements designed to compensate for the increases, such as a lower income tax, are small in comparison to added obligations.
Higher prices will be a result of less consumption by residents and tourists, so that the extra funds GOA is expecting to collect, will not materialize.
The release goes on to explain, that one of the most business-damaging elements in the new tax package is linked to real estate devaluation, a decree that will impact investment drastically, and will chase investors away.
High prices combined with the global distribution challenges, will deliver a higher inflation rate.
According to AHATA, the private sector regrets the decisions made in exclusion of the business community, which repeatedly offered to participate in the process of creating an effective tax reform for Aruba.
In reality, GOA refuses to accept AHATA’s expertise and help. The lack of transparency and exclusion result in negative consequences for the entire community.
The minister reacted immediately; she is sensitive to criticism. Aruba’s fundraising efforts in the Netherlands, she said, saved commerce and the hotel-sector during the pandemic. That money borrowed that must be repaid, is the reason why today, the national debt is so enormous, and will not be forgiven by the Dutch.
AHATA should remember, it was on the receiving end of the funds, jabbed the minister as if it was a favor, a special service granted to the association.
Didn’t this keep the economy alive, and the tax inspector in business, securing jobs and keeping the wheels of the economy running?
Bottomline: GOA’s focus is wrong.
It aims at collecting enough funds to sustain its inefficient institutes, and burden the community instead of reducing its spending, structurally.
GOA should create more efficiencies, and implement an aggressive plan to identify tax-resistant pockets, representing a large number of noncompliant locals.
But no one is listening.
