On 9 July 2015, the Ministry of the Interior and Kingdom Relations sent an overview to the Second Chamber and the public entities of Bonaire, St. Eustatius and Saba with a global breakdown of the income and expenditure per island in the Caribbean Netherlands. This overview showed that respectively 47.2%, 24.1% and 16.9% of the financial flows towards Bonaire, St. Eustatius, Saba are covered by the premium and tax income from the islands.
The choice for the financial year2019
This overview is based on the financial year 2019. This is to provide a realistic picture of the overall distribution of income and expenditure per island. After all, in 2020 the central government spent about 100 million euros extra on Bonaire, St Eustatius and Saba on support packages due to the Corona pandemic than in previous years. In addition, the central government has also received a total of about 10 million euros less tax and premium from the Caribbean Netherlands. Therefore, 2020 would lead to a distorted picture of the global distribution. This means that the global distribution for 2019 provides the most recent, realistic picture of how the expenditure towards the Caribbean Netherlands relates to the income received by the central government from the Caribbean Netherlands.
Tax and premium income
Over the calendar year 2019, the Tax and Customs Administration / Caribbean Netherlands (B/CN) has inventoried the receipts of the state taxes and national insurance contributions for each of the three islands of the Caribbean Netherlands. In total, 162 million euros were received in state taxes and premiums.
Broken down by island, the following picture emerges:
Proceeds 2019 State taxes and national insurance contributions
|In million USD|
Government expenditure in the Caribbean Netherlands
To make a breakdown of government expenditure on Bonaire, Sint Eustatius, and Saba have been chosen for the financial year 2019. For just under half of the expenditure, it is possible to determine exactly which expenditure has been incurred for which island. For the remaining expenditure, the same principles have been used as far as possible in the overview for 2014 to arrive at a breakdown by island:
- As with the previous overview of 2014, expenditure on kingdom tasks, such as defense and foreign affairs, has not been included, because these expenses benefit all countries of the Kingdom.
- It has been decided to also take incidental financial flows, such as the special benefits, to the islands. This can again give a distortion by, for example, multi-year expenditure in which a large amount just took place in 2019 or just not. Think of the expenditure of the Ministry of Infrastructure and Water Management for the airport on St Eustatius (€5.9 million). However, just as for the overview of 2014, the consideration was made that not including incidental expenditure does not give a good picture of total government expenditure.
- The expenditure of the Ministry of Social Affairs and Employment (mainly benefits) and student finance (Ministry of Education, Culture and Science) have a strong relationship with the number of inhabitants; therefore, this expenditure was allocated in proportion to the number of inhabitants per island. For the distribution of the number of inhabitants, the CBS figures from 2019 were used.
- Part of the expenditure (almost €53 million) benefited all three islands and could therefore not be split up. This applies, for example, to police personnel rotating across three islands. To make the best possible distribution of government expenditure, the so-called CN key was used for the non-disaggregatible expenditure, just as in the previous overview. Half of the expenditure is divided equally between the three islands and the other half of the expenditure is in proportion to the inhabitants. This expresses that the number of inhabitants is important, but that the small scale of the Windwards causes extra costs compared to the more inhabitant-rich Bonaire.
- The Free Benefit is calculated by taking the gross free distribution and adding the additional LPO (adjustment wage and price development).
Based on the explained assumptions and starting points, the following picture emerges of the expenditure per island:
Government expenditure 2019 (in M€ )
Considering the assumptions and principles explained above, this leads broadly to the following tax and premium income and expenses in the Caribbean Netherlands:
|Net expenditure and income by island||National expenditure CN
|Taxes and premiums
|Revenue expressed as % of government expenditure
|Revenue expressed as % of government expenditure
In conclusion, the central government received around €162 million in revenue from the Caribbean Netherlands in 2019 and incurred expenditures amounting to around €444 million. This means that 49.6%, 19.9% and 11.6% of the central government’s spending on Bonaire, St Eustatius and Saba are covered by income from these islands respectively.
The full letter (in Dutch) can be downloaded HERE.