MP Wescot-Williams requests Central Bank’s advice on proposed transaction tax

GREAT BAY--Member of Parliament, Sarah A. Wescot-Williams has formally written to the Minister of Finance, Marinka Gumbs, requesting that the Government urgently seek the views of the Central Bank of  Curaçao and Sint Maarten (CBCS) on the viability and feasibility of a proposed transaction tax for Sint Maarten.

Wescot-Williams noted that the idea of a transaction tax continues to dominate discussions on fiscal reform and public finance. “While some see this tax as a cure-all for our budgetary challenges, I have expressed concern that -particularly at the rates being discussed- it could have a distortionary impact on the economy,” the MP stated.

She emphasized the importance of expert and data-driven input before any political or legislative decisions are made. “This is not a debate to be driven by emotion or convenience,” she said. “We need to understand its implications for consumers, businesses, and competitiveness, and that requires the technical insight of the Central Bank.”

A transaction tax, sometimes referred to as a financial transactions tax (FTT) or banking turnover tax, is a levy imposed on the value of transactions such as deposits, withdrawals, or payments. Such taxes are administratively simple to collect but can have unintended consequences, including increased costs of doing business, reduced banking activity, and price inflation if applied broadly. Internationally, transaction taxes have been implemented in countries such as Brazil, India, and several European Union members, but often with mixed outcomes, success in revenue generation but challenges related to economic distortion and financial inclusion.

Wescot-Williams reiterated that fiscal reform must be comprehensive, addressing both efficiency and equity. “Sint Maarten’s tax reform should aim to broaden the base, simplify compliance, and stimulate growth, not discourage it. The transaction tax discussion must take place in that wider context, guided by expert advice.”

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