Part 1: The Necessity
Since the presentation of its key policy points last Thursday, PAR has received numerous questions, particularly regarding its proposal to abolish income tax and sales tax (OB).
In this series of articles, I will explain the necessity, justification, and implementation of this proposal. This first part focuses on why this change is necessary, with a specific emphasis on income tax and social security contributions.
According to the June 2022 Economic Bulletin of the Central Bank of Curaçao and Sint Maarten (CBCS), titled "Tax and Premium Burden in the Monetary Union of Curaçao and Sint Maarten", the tax burden (which includes both taxes and premiums) in Curaçao is significantly higher than in other countries in the region and beyond.
In 2020, the total tax burden in Curaçao stood at 47.3%, while the Caribbean regional average was 28.7%. This means Curaçao’s tax burden was 64.8% higher than the regional average.
For comparison, in Sint Maarten, which shares the same monetary union as Curaçao, the tax burden was only 23.3%—meaning that Curaçao’s tax burden is more than twice as high as that of Sint Maarten.
Even when compared to developed Western nations with a higher or similar standard of living, such as France, the Netherlands, Canada, the United Kingdom, and the United States, Curaçao stands out negatively. In these countries, the average tax burden is 35.3%, whereas Curaçao’s 47.3% makes it the highest among these much more developed economies—34% higher than the group’s average.
Why Is the Tax Burden So High?
One major reason for this excessive tax burden is the relatively small group of taxpayers. Curaçao has a population of approximately 168,000, yet only around 60,000 working individuals contribute to taxes and premiums. This means that a limited middle-class workforce is responsible for sustaining the entire society.
Consequences
Excessively high tax burden
A shrinking middle class (leading to increasing poverty)
High labor costs for businesses
In short, this is a recipe for economic stagnation, not growth.
The Urgency for Reform
This situation is simply unsustainable for our society, and that is precisely why PAR is proposing these reforms.
Quincy Girigorie is a former Minister of Justice, current Member of Parliament and leader of the opposition party PAR.