Caribbean Netherlands tax-free sum to increase by US $5,000

Second Chamber, minister discuss social minimum

The tax-free sum, the yearly amount on which people don’t have to pay wage- or income tax, will go up substantially in Bonaire, St. Eustatius and Saba per January 1, 2023, from US $12,000 to more than $17,000.

Dutch Minister for Pover­ty Policy, Pensions and Par­ticipation Carola Schouten announced this towards the end of a debate on ‘Tuesday with the Permanent Committee for Kingdom Relations of the Second Chamber of the Dutch Par­liament about establishing a social minimum for the Caribbean Netherlands.

The large increase of the tax-free sum is especially good news for low-income earners who will be pay­ing considerably less tax on their wages, leaving more money to sustain them­selves and their family, which in turn will reduce poverty. “This increase is of great significance,” said Minister Schouten.

Initially, the tax-free sum would have been increased by $500, from $12,000 to $12,500 per year. Schouten explained that this amount had been set too low, also in view of the high inflation on the islands and the in­creasing cost of living. She said that after having been in contact with the Ministry of Finance, she was able to announce the corrected in­crease of the tax-free sum to over $15,000.

The Permanent Committee for Kingdom Relations of the Second Chamber of the Dutch Parliament in a debate about the social minimum for the Caribbean Netherlands. (Su­zanne Koelega photo)

Designated committee

The minister further an­nounced the establishing of a designated, independent committee that will inves­tigate the systematics to in­troduce a benchmark social minimum for the Carib­bean Netherlands in 2024.

This committee was the specific wish of the Second Chamber, which adopted a motion of Member of Par­liament (MP) Jorien Wuite of the Democratic Party (D66) in October this year. The committee will present its findings before the han­dling of the 2024 budget of Social Affairs and Labour in 2023.

Schouten pledged to press on with the process to es­tablish the social minimum. “I will continue unabated towards the social mini­mum benchmark,” she said and assured that her inten­tion remained to do so in 2024.

The minister did leave some room for deviation from this date, because the establishing of the social minimum also depends on the economic carrying ca­pacity of the three islands. Increasing the legal mini­mum wage requires the cooperation of the business sector and entrepreneurs have to be financially able to pay higher wages.

Many steps

The minister decided to go ahead and raise the legal minimum wage in Bonaire, Saba and St. Eustatius by respectively 18.2%, 15% and 14.3% per January 1, 2023. “I went a step further than the stakeholders pro­posed, because there are still many steps to take to get to the benchmark social minimum,” she said.

The social allowances will increase by 10%, plus the inflation correction, which comes to a total of 19-22%, depending on the island. From the prospect of combating poverty, the minister decided to increase the social allow­ances more than the legal minimum wage. “I did that consciously because I don’t want the social allowances to remain behind.”

During Tuesday’s debate, Schouten reiterated that the elderly pension AOV per January 1, 2023, will go up to the level of the $1,600 benchmark social mini­mum, and that the child allowance will increase by $20 per child per month. In addition, the cost of day­care will go down.

Keep balance

The minister said it was important to keep a balance in the process of increasing the minimum wage and the social allowances on the one hand and lowering the cost of living on the other hand. “We cannot keep in­creasing the income end­lessly while not enough is done to lower the costs.”

She said the benchmark social minimum committee would be looking at things like this, but also at the exact situation of poverty, which steps were needed to eradicate poverty and introducing a wage cost subsidy.

The MPs were content with the pledges and the interim measures of the minister, but they were also critical about the length of time to introduce a bench­mark social minimum for the Caribbean Netherlands, something that the Second Chamber has been asking for a number of years.

“[It’s coming — Ed.] 12 years too late. It’s a shame that it is taking so long,” said MP Kauthar Bouchal­likh of the green left party GroenLinks, who criticised the big difference between the quality of life of peo­ple in the Caribbean and the European parts of the Netherlands.

Working poor

“Poverty has been rising and there are now more working poor than ever,” said MP Wuite. She chal­lenged the Dutch govern­ment to show the courage to admit that the bench­mark social minimum that was set several years ago is outdated with the steep increase of the cost of liv­ing. Wuite requested a fol­low-up two-minute debate which enables MPs to pre­sent motions.

MP Roelien Kamminga of the liberal democratic VVD party said it was “shocking” to see that peo­ple with a job, the so-called working poor, still couldn’t make ends meet. She em­phasised the importance of also doing something about the high cost of living, while at the same time improving the islands’ economic po­tential.

MP Sylvana Simons of the BIJ1 party said that poverty on the islands was the result of the colonial past, aside from the cultural and social inequality. She said it was “disgraceful” that people in the Caribbean Netherlands were living in poverty while being part of the Nether­lands.

“We are making steps, but there is still inequality be­tween the Caribbean part of the Netherlands and the European part of the Neth­erlands,” said MP Don Ceder of the ChristianUn­ion (CU), who called on the minister to “make haste” with the introduction of the benchmark social mini­mum. He said that while raising the legal minimum wage and the social allow­ances was a good thing, it did not solve the matter of a lacking social minimum.

The Daily Herald.

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One comment

  1. Also the maximum amount that can be claimed for repair of the primary family home on the tax form should also be increase to $2500. The current maximum amount of ~$1450 is ridiculous and is not a true reflection of a monetary amount that is spent by home owners for repairs.

    The cost for materials and labour have risen considerably to carry out these repairs. Why can we not get a more reasonable repair deduction to offset these rising cost?

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