WILLEMSTAD - While the intent behind Finance Minister Javier Silvania’s tax cleanup policy was well-meaning, its execution has become a major issue. This was revealed during a parliamentary meeting yesterday regarding uncollectible tax debts for 2017.
Due to the flawed approach taken by the minister, three billion guilders in tax debt is now considered uncollectible. Instead of following the usual procedures and involving Parliament in the decision-making process, Silvania chose to explain the policy via Facebook, which has led to confusion and significant financial losses, according to opposition members.
80/20 Arrangement
Finance Minister Silvania stressed that no law prohibits Curaçao's tax authority, the Tax Department from offering discounts on overdue taxes. He based this claim on several opinions he had received in the past.
According to Silvania, since 2010, the Tax Department had been following a debt relief policy that was never officially published, nor prohibited. This policy, known as the "80/20 arrangement," allowed taxpayers to settle 80% of their debt, with the remaining 20% being forgiven.
"Every government since then allowed this policy, including the previous finance minister, who referred people to the Tax Department to take advantage of it," Silvania stated.
In May 2022, after intensive discussions and with the assistance of a support team, the Tax Department proposed a plan to clean up the tax records. The plan had three main elements: writing off uncollectible old debts, removing debts older than five years, and introducing a tax credit worth 2,500 guilders. Five different institutions, including the Ministry of Finance, SVB, SOAB, Cft, and Fiscal Affairs, gave positive feedback on the cleanup plan.