ORANJESTAD - The business community and trade unions feel surprised by the decision of the Wever-Croes cabinet to increase the tax on business turnover (BBO) by half a percent to 1.5% from 1 January.
17 employers' and employees' organizations have objected to the government's "inconsistent policy" in a joint fire letter. To the surprise of many, the government announced on Thursday that it would postpone the introduction of VAT by a year and, as an alternative, increase the BBO.
The cabinet is urgently looking for at least NLG 100 million to close the budget gap that threatens before 2023. The deficit is mainly caused by the fact that the advice of the Financial Supervision Board (Cft) to cut spending is categorically ignored by Finance Minister Xiomara Maduro.
The introduction of VAT will further boost the already high inflation, Wever-Croes argued to postpone the decision. The business community points out that increasing the BBO will also lead to a sharp rise in consumer prices. It is in any case too late for business owners to adjust their BBO administration in time to the announced increase. There is widespread opposition among the population to the introduction of VAT. The government appears to have succumbed to social unrest, preferring to confront employers' and workers' organizations rather than angry voters.
“Practically all social partners in Aruba have opposed Prime Minister Wever-Croes' chaotic approach to tax reform. The alternative of raising the BBO is also widely rejected," said party leader Mike Eman of opposition party AVP. He speaks of 'panic football' and 'flip-flop decisions' and points to a letter from the Cft that the necessary tax cuts are insufficiently addressed and cover is found too much in raising taxes. Eman: "Even the Cft realizes that Wever-Croes is squeezing the Aruban citizens to continue serving 'family and friends'."
In the meantime, the Wever-Croes cabinet also has another financial instruction hanging over its head. On Friday, the Kingdom Council of Ministers will discuss the advice of the Cft Aruba to give an instruction to cut costs.