The BES Reporter reported the following:

If the plans as outlined by the former Cabinet proceed, a much larger group of citizens will fall under the higher tax rate of 35.4% instead of the 30.4% that currently applies to nearly all residents of Bonaire, St. Eustatius and Saba.

Where the higher rate of 35.4% currently applies only to incomes above $322,769 per year, under the 2025 Tax Plan, this rate would apply to incomes starting from $50,000. This represents a threshold that is 84.6% lower than the current one. The executive councils and island councils of Bonaire, St. Eustatius, and Saba, to put it mildly, do not see the logic behind this change.

The first objection, as expressed in a letter from the islands to the Ministry of Finance, is that the proposed $50,000 threshold is not well-supported. “There is a lack of a purchasing power analysis to assess whether incomes above this threshold can bear the higher tax burden without falling into financial trouble,” the islands state.

The second objection is that the measure does not consider the effects on families with many children, and there is no adequate income policy to mitigate the impact on vulnerable groups.

The third objection voiced by the islands is that lowering the threshold could mean that many middle incomes, which are only slightly above the social minimum, are unfairly burdened with higher taxes. “This goes against the original intention of tax increases, which was also aimed at strengthening purchasing power for middle incomes,” the letter writers note.

Loss of Simplicity

A fourth objection raised is the potential loss of simplicity in the tax system, which was introduced on 10/10/10, with the ‘flat tax’ on income being a core component. “The measure undermines the principle of a simple tax system, which until now only had a top rate for very high incomes. The proposal would lead to a more complex system with higher administrative costs, which contradicts the agreements on tax reforms in Caribbean Netherlands,” the letter sent to the Cabinet last week states.

The BES Reporter.