WILLEMSTAD - As a result of the global 'container crisis', the government of Curaçao is adjusting one of the plans in the coalition agreement. The sales tax rate, better known as 'OB', will not be increased from 6% to 7%.
Containers
This was announced by Minister of Finance Javier Silvania. The coalition agreement of the Pisas II cabinet states that the turnover tax percentage will be changed to a fixed 7% rate.
In an explanation, Silvania indicates that as a result of Covid-19, the prices of containers worldwide have increased enormously, making products much more expensive at the moment. According to Silvania, the purchasing power of the Curaçao population has declined sharply as a result. He calls it 'progressive insight' not to increase the OB-rate.
Opposition
The planned increase had been criticized by the opposition. Former Minister of Economic Development and current MAN party leader Steven Martina stated last week that the change in the OB rate has enormous consequences for the purchasing power of the population.
An increase in the OB from 6 to 7 percent in combination with the elimination of the OB reduction on imports will cause a huge price increase in Curaçao, according to Martina. According to the opposition MP, this makes products not 1, but 6.3% more expensive.
The party MAN applauds that Silvania has withdrawn the plan, at least for the time being.
Inflation
According to recent figures from the Central Bureau of Statistics (CBS) in Curaçao, the island has an inflation rate of 3.2 percent. The categories that contributed most to the price development, in the period from August 2021 compared to August 2020, are food, housing and health care. In the period mentioned, the price of food increased by 6.5%.
The loss of purchasing power is an important issue for the Pisas-II government, of which Silvania is minister. According to the coalition agreement, increasing the well-being and prosperity of the population is the most important guideline.