Before going into my view of what I believe can help St Maarten in a financial sense, I will refer to one of the scriptures in the bible from where I draw my vision for a fair tax system although I don’t believe this tax reform will be a long term solution because of SXM’s none diversified nature. I will elaborate on the scripture at the end of my article. The following is taken from Matthew 20:1-15 (New International Version).
The Parable of the Workers in the Vineyard
1"For the kingdom of heaven is like a landowner who went out early in the morning to hire men to work in his vineyard. 2He agreed to pay them a denarius for the day and sent them into his vineyard.
3"About the third hour he went out and saw others standing in the marketplace doing nothing. 4He told them, 'You also go and work in my vineyard, and I will pay you whatever is right.' 5So they went.
"He went out again about the sixth hour and the ninth hour and did the same thing. 6About the eleventh hour he went out and found still others standing around. He asked them, 'Why have you been standing here all day long doing nothing?'
7" 'Because no one has hired us,' they answered.
"He said to them, 'You also go and work in my vineyard.'
8"When evening came, the owner of the vineyard said to his foreman, 'Call the workers and pay them their wages, beginning with the last ones hired and going on to the first.'
9"The workers who were hired about the eleventh hour came and each received a denarius. 10So when those came who were hired first, they expected to receive more. But each one of them also received a denarius. 11When they received it, they began to grumble against the landowner. 12'These men who were hired last worked only one hour,' they said, 'and you have made them equal to us who have borne the burden of the work and the heat of the day.'
13"But he answered one of them, 'Friend, I am not being unfair to you. Didn't you agree to work for a denarius? 14Take your pay and go. I want to give the man who was hired last the same as I gave you. 15Don't I have the right to do what I want with my own money? Or are you envious because I am generous?'
It has always concern me that here in SXM we are everything but something. We have some form of a social (welfare) system, free enterprise system (America), and almost a dictatorship system. In other words it appears as though we are confused and don’t know what we want. But it is my belief that some prefer it this way as it benefits these some. But like the good book says in Matthew 16:26:
“What good will it be for a man if he gains the whole world, yet forfeits his soul? Or what can a man give in exchange for his soul?” In adaptive words, what good is it for the some to gain all the wealth in SXM and not be able to enjoy it? If you have not learned from history then you are a fool. When the gap between the haves and have nots is increasing, so is crime. Meaning, there is a direct correlation with poverty or monetary deprivation and crime. I don’t know about you but I prefer to be able to chill at home, around a pool, without having to be paranoid thinking if someone will brake in and hold me up at gunpoint possibly even killing me because they are in need of money or items to sell for money. Or worse, leaving or retuning to your home in fair wondering who is cooping you in order to rob you because they know you are better off than they are. Hunger and monetary deprivation does not see nor care how hard you work to make it nor your strong ambitions which allowed you to achieve. Unfortunately as unfair as this may sound, it is the reality.
Now a fair system should reward entrepreneurship, allow fairness and opportunity to every willing heart, influence philanthropy, and ensure the wealth flows in a circle within the society thereby minimizing wealth leakage to outside.
Raising taxes forces people to live with more debt in order to be able to survive since more and more of their money goes to the government to fund programs. Credit cards will become more essential for day-to-day survival. People without access to credit will slip below the poverty line. The increase in inflation and cost of retirement will compound this problem. Albert Einstein once said: “We can’t solve problems by using the same kind of thinking we used when we created the problem.”
In America, the average person with a job has taxes, debt, inflation, and saving for a retirement plan taken from their paycheck before they get paid. In other words, everyone else gets paid before the employee gets paid. A majority of a worker’s paycheck is taken before he/she receives a cent to live on. Sounds familiar here on SXM right?
Robert Kiyosaki in his online book “The Conspiracy of the Rich” chapter 11 states….“You may have noticed that most of a person’s money goes into the pockets of the conspiracy to cover that person’s living expenses. I believe this is why there is no financial education in our schools. If people knew where their paycheck was going, people would revolt. With a sound financial education, a person can minimize those expenses or even use those expenses to put that money into their own pockets.”
The statistics will show that 50% of SXM’s working population earns gross Naf 2,000 and less. Yet we have an economy with the cost of living being higher than the U.S. Then we want to be a welfare state with people barely making ends meet with a ridiculous salary that is taxed in order to pay for social costs, environmental, infrastructural, and government costs. Yet it was a common saying that the SXM economy is booming but yet the bulk of government revenues are wage tax. Meaning the day people say the hell with all of this modern day slavery and stop working, government will be up a creek. An analogy which goes like this: “Dynamic Equilibrium” occurs when two or more opposing processes proceed at the same rate. Let’s say, for a simplified example, that you have a small island with a (1) wildly growing annual carrot crop, (2) a family of rabbits and (3) a family of wolves. The rabbits need the carrots to eat and thus survive, while the wolves need the rabbits to eat and thus survive. In each pair, there is an equilibrium that must exist based on the carrying capacity of the island. If there are not enough carrots to feed the current population of rabbits, some rabbits will not survive. If there are not enough rabbits to feed the wolves, some wolves will not survive. If the carrot crop is destroyed by drought, then no one survives.
Now tax reform, in my view, is very easy to understand and to implement. But for a greedy person, what I am about to recommend will just be plain foolishness. How can you tell if you are greedy? Well that is why I purposely started off with the scripture in the beginning. And if your first inclination after reading it was that it was not fair to the ones who started way before the day ended then you are a greedy bastard. But guess what? I also thought this was unfair before I was explained the in-depthness of the parable which I will in turn explain at the end of this article.
Let us first start with the wage and income tax. There should be a cap of 15%. A social security levy of 5% could be part of this income/wage tax or incorporated on top of this. Now this would inevitably cause a problem for government. So how do we rectify this? Simple. We know longer can accept the free-port policy on all imported goods. Because of improper management of the island, the free lunch as we know it is over. Imported luxury goods should be charge a luxury import tax and goods that help fill up our landfills or that are not biodegradable should be burden with an import levy. Alcohol and cigarettes should be burden with an import levy. Import levies are direct cash flow for government and it is not dependant on certain periods of the month because imports are daily. Now this of course will have a negative reaction if not controlled and compensated for at the same time. So I say get rid of the turn over tax and lower the profit tax and increase basic food items controls. Furthermore, create a tax benefit incentive for persons engaging in producing/ manufacturing/growing products locally. Create tax benefit incentives for companies who sell merchandise but have a recycling program for the products they sell. Create a tax benefit incentive for companies who engage in recycling type activities. Create tax benefit incentives for foreign investors if a minimum of 30% of their undertaking is owned by locals. Ensure any borrowings by government or government owned companies incorporates a certain percentage of bonds that can only be purchased by locals where the interest will be either not taxable or taxable to a set cap. Encourage our own to come back to contribute by allowing them not to pay income/wage tax up to a certain period providing they not leave the island within a certain period. Give tax benefit incentives to companies who engage in renewable and clean energy. This can attract some desired companies thereby diversifying our economy and help lower our overdependence on oil. Reform the property tax to help curve real estate speculation. Some suggestions would be to charge property tax on individuals with second and additional homes. Or, persons who are not residents of the island will have to pay property tax or property tax on second and additional real estate. Foreign director licenses costs should be increased as well as expats labor permits if they stay longer than two years on the island.
What I have given here is a generalized picture of what we should be coming up with and debating about doing. Economic models can be developed to see what the likely effects would be. But seeing the fact that everyone keeps running here and will not likely leave, I don’t think many persons’ objections will result in them leaving the island if their objections are not honored because truth is, they will still be better off here with a minor inconvenience change than with for example having a similar business in the U.S. and having to deal with the various stringent laws and the IRS. Furthermore, if they do decide to abandon ship, what is the worse that can happen? Answer: Locals getting opportunity to take over ship and stepping up to the plate to run things. In other words, we got them by the co-hones without us even realizing it.
The explanation of the parable is as follows:
The first men who were hired in the early morning agreed to a denarius with the landowner. A denarius is sufficient to feed a man and his family for a day. Anything less and a man would not be able to feed himself and family sufficiently (basic needs). Hence the compassionate landowner who hired the other men later during the day would not have given these men anything less than a denarius less they could not take care of their basic needs. Furthermore, all the men wanted to work but no one had hired them. So you see, what we think is fair is not always fair in the eyes of god because our ways are not his but he came to earth to show us the way and that way is what I try to incorporate into many of my dealings and decision making.
Emilio Kalmera