The purchasing power of residents in the Caribbean Netherlands—Bonaire, St. Eustatius, and Saba—is expected to decline significantly in 2025. This sharp drop is attributed to the termination of temporary policy measures and delays in implementing parts of the BES 2025 tax plan. In some cases, households may see their purchasing power decrease by up to 10%.

Arjan Vliegenthart, director of Nibud, explained, “In 2023, the Committee on the Social Minimum for the Caribbean Netherlands found that households with minimum incomes were already struggling to make ends meet. While measures taken in 2024 provided some relief, this improvement now appears to have been only temporary.”

Tax and Policy Changes Impacting Incomes

The measures introduced in 2024 included increased social assistance, the minimum wage, child benefits, and temporary purchasing power interventions such as energy subsidies and reduced fixed connection tariffs for utilities and telecom. However, these temporary supports will be discontinued as of January 1, 2025.

Additionally, the planned increase in the tax-free allowance has been postponed, meaning individuals earning the minimum wage will now be subject to taxation. This change will have a notable impact on household budgets. For example:

• A single person earning the minimum wage will see a monthly loss of $173 to $184 in 2025.
• A household with an income of 1.5 times the minimum wage and two children will lose $165 to $174 per month.

Limited Support for Struggling Households

The energy subsidies and allowances that were in place for 2024 were designed to support the most vulnerable households, particularly those with lower incomes. While some single individuals benefited from these measures, households with children continued to struggle. Despite increases to child benefits, social assistance, and pensions like the AOV and AWW, many families still faced financial shortfalls.

Looking ahead to 2025, Vliegenthart expressed concern: “We do not anticipate any reductions in fixed costs or grocery expenses. The discontinuation of these subsidies will disproportionately impact those already struggling, especially families.”

The situation highlights ongoing challenges for residents of the Caribbean Netherlands, as policy changes risk deepening the financial strain on many households.

NIBUD

Nibud is an independent knowledge and advisory center specializing in household finances. Their mission is to create a Netherlands free of financial problems.