Sunday , October 1 2023

Opinion: Small Island Economies – The struggle to survive Covid 19

Dear Editor,

While the world and certainly, our small island economies, were reeling from the effects of the Corona Virus Pandemic, many struggled as country after country, those big and small, shut their borders to visitors. The fallout from such closures meant no tourists thus no revenue going into the coffers of restaurants, hotels, boutiques and sadly, into the hands of small, many family owned businesses which were dependent on tourism traffic.

The world was plunged into an economic morass from which it is still valiantly attempting to struggle back onto firm ground.
While the global economic picture turned more bleak as the days of the pandemic rolled on, governments looked to offer financial bailouts to their desperate business communities, big business groaned under enormous debt created when times were good but now floundered as the death toll kept rising and the work force dwindled as people across the world succumbed to the virus and industries ceased operations.

In an attempt to help business and its economy survive this modern day plague, the Dutch National Government floated a number of relief packages for its people. The financial packages provided to the BES Islands by the Dutch, as relief during the days of the Corona Virus, started from 13th March to June and recently, it was extended to October 2020. This was received in different ways by the business community, while many businesses applied for this much needed financial relief, others saw it as a double edged sword. Viewed with skepticism, quite a few had no interest in it, they felt that at some time later, this “free money” would be reclaimed in the form of taxes thus, many did not want to apply for it.

Now, it seems that this has come to pass. Here on the islands of Statia and Saba, the business community is still in a state of flux, there are no visitors allowed on the islands, therefore, no tourism revenue, hotels are being used as quarantine stations to house people who belong to the islands and have returned from overseas visits. Restaurants have reopened but are operating at the level of 15 – 25% of their normal daily turnover. Other businesses such as boutiques and other small shops open and close daily, without taking in any revenue that day; utility bills are still coming, staff still expects to be paid. Supermarkets and gas stations are the only businesses which are making money in these uncertain times because people must have food and they must be able to drive to work.

The Unfortunate reality now is that this “free money” may not be so free after all. In taking a closer look at the Loonbelasting (Wage tax) for instance: When the employee receives the 80% SZW compensation from the “free money” the employer has to add the 20% difference to bring the employee’s wage payment to 100% of the amount he or she usually receives, however, the employer still has to pay the wage tax on the total amount. Wage tax is due, whether or not the business has made any revenue during the period 13th March onward. Not every business made the criteria for the EZK package of $4,400 or the $2,200 Variant but the wage tax is paid out of the $4,400.00 or the $2,200.00, whichever your business received. As a business operator, it is a glaring fact that neither the $4,400 nor the $2,200 is enough to cover all the expenses incurred during this time. This year the date to file has been extended to July 15th.

As an example of this, if an employer has two employees receiving the 80% payment stipulated and that employer has qualified for the $4400 as expense compensation; the wage tax they would have to pay is over $3000; they would be left with an amount of only $1,400 to cover all the other expenses for the business. This, we all know, would be virtually IMPOSSIBLE.

Even more burdensome is the situation with the Vastgoed Belasting (Property tax). In the case of hotels and guesthouses, most of which have been closed since March, particularly on Statia and Saba; if the property has not been used due to the Covid19 pandemic, they should be exempt from paying this tax, since they did not make any income during the period.

We have a tremendous problem on our islands with the ABB. As it is we have been wrestling with the high cost for the importation of goods, even on goods brought in from the European part of the kingdom, into the Caribbean part. At the moment, we pay 6% on the cost of shipping of a container from Rotterdam to Saba or Statia, since we are supposed to be a part of the Kingdom, such shipments should be considered internal yet we are charged those fees. Particularly in this time, there should be an exemption of ABB on all products brought into our islands for the remainder of the year, not only from the Netherlands but from other locations such as the USA. It would be a great relief on the budgets and wallets of all of the inhabitants of our islands.

The information above describes our current situation on both Saba and Statia. Both fragile economies that does not need much to be completely out of balance. This created unbalanced economy is rushing into creating bankruptcies, increased unemployment, increased cost of living, increased poverty.

As Chamber of Commerce we do therefore ask the Dutch Federal Government to take special attention to the above and be able and willing to discuss this situation as soon as possible with the Chamber.

The foregoing is not imaginary, it´s factual and describes, in all too vivid detail, the situation which currently exists on Statia and Saba, both fragile economies. It would not take much more to send them both completely off balance. This new unbalanced situation in our already fragile economies is fast approaching a dangerous precipice; many of our small businesses, which were already treading high water before March 2020 and the Covid pandemic, now find that they are rushing towards bankruptcies. The islands are grappling with increased unemployment and the ever inflating cost of living which is threatening to push the already marginalized population further into poverty. This is an unacceptable situation and one which should be addressed immediately.

As the Chamber of Commerce responsible for the business community in these islands of the Caribbean Netherlands, we implore the Dutch Federal Government to take special note of the concerns expressed and make time to speak with representatives of the Chamber of Commerce as a matter of urgency.


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