WILLEMSTAD - The Curaçao Business Association (VBC) is concerned about rapidly rising consumer prices, including fuel rates. The sanctions against Russia have drastically increased the prices of fuel and grain. This increases the already high inflation even further. To counter the decline in purchasing power, the VBC has presented an economic recovery plan.
Curaçao has already endured several setbacks in recent years, before the outbreak of the pandemic. The economy has been shrinking over the past twenty years. Purchasing power also declined. In addition, the oil refinery has been inoperative for three years and several companies have had to close their doors due to the pandemic. In addition, Curaçao has a high unemployment rate of 20 percent and a youth unemployment rate of 40 percent. Finally, the debt burden of an average family in Curaçao is high. Of every 100 guilders, 88 guilders goes towards paying off debts.
VBC is afraid that the economic growth of 6 percent, as the Central Bank forecast at the end of last year, will not be achieved. The association is also concerned about the fall in the value of the euro. The price is falling, according to analysts. The euro can be equivalent to the dollar. This could have serious consequences for tourism.
According to the VBC, with a lower euro, Curaçao is no longer competitive with countries in Southern Europe. It will then be too expensive for Dutch tourists to come here.
In the economic recovery plan that VBC has presented to the government, the interest group proposes a crisis approach. This includes a reduction in sales tax and excise duties on energy. The extra sales tax that the government now collects is incidental in nature. According to the VBC, the higher revenue from sales tax is caused by rapidly rising prices on the world market and inflation. VBC proposes to use the old rates, pre-Covid-19, when calculating the turnover tax. As a result, the government receives less income, but the purchasing power does not decline.
Furthermore, the VBC wants the government to reintroduce the exemption from sales tax on “commercial goods”. The Curaçao government must also convince the Netherlands that the island needs the same support as the BES countries. "We are together in the Kingdom and we have not seen the situation with the rapidly rising crude oil prices since 1982," the VBC said in a press release.
Finally, the VBC hopes that the Tax and Customs Administration will come up with a 'real' remediation plan. Companies with a tax debt can then make a payment arrangement for 5 years. If the business owner adheres to this payment arrangement, the remaining amount will be waived.
The government has not yet responded to the economic recovery plan.