Saint Bart's Evolving Political and Economic Landscape

by Devon Bates
October 2, 2007

Just 8-square miles small, the Caribbean island of Saint Barthelemy (aka St. Barts or St. Barths) is a bright spot on the map of celebrity fun-seekers as uncrowded white-sand playground alternative to the Cote d'Azur in the winter months. Revered by French and American investors as a chic second-home Mecca and by descendents of Norman, Briton and Swedish settlers, St. Barts residents are seeing tectonic-sized shifts in the political and economic landscape of this beautiful island.

In January 2007, St. Barts officially achieved a milestone nearly four decades in the making by becoming an Overseas Territorial Collectivity of France (OC) and separated from dependence upon French sister islands Guadeloupe and St. Martin. Previously governed as a Commune of Guadeloupe - St. Barts always was a step-child for the attention of motherland France. Not any more. As an OC, St. Barts can determine its own destiny in political, social, and cultural arenas by having a freer hand in managing its own affairs. St. Barts has achieved near-autonomy and its leaders are now creating laws related to taxes, tourism, public transportation, schools, housing, construction zoning, environmental and energy affairs, as well as that all-important residency status.

Bruno Magras, elected president by a landslide in June 2007 was, not surprisingly, the spearhead for the autonomy movement when he campaigned to become mayor in 1995. Prior to that, different political arrangements with France were fomenting as early as the 1960s when Britain dispersed many of its Caribbean island dependencies. Galvanized by then-president Jacques Chirac's agreement to consider a new political status for St. Barts in 2000, the local population overwhelming voted to proceed with the OC designation in 2003 and continues to enthusiastically back their new president.

President Magras is now sorting out all the new responsibilities of state: a new governing territorial council replaces the old municipal council; new statutes will determine who and who isn't a resident; and many new public works are on the wish list. As a Commune of Guadeloupe, St. Bart was never allowed its own hospital, although it did have a clinic, and the roads are notoriously narrow and can be bumpy. Guadeloupe held the purse-strings for new construction on St. Barts, and new projects often stalled there. But all is forgiven now that St. Barts has gained the authority for self-governance with its own destiny to fulfill. Of course, with maturity comes the issue of taxes...

Tax-free Haven for the Wealthy

Perhaps it all started with the buccaneers who preyed upon Spanish colonies and other mercenaries who used the warm and hospitable port of Gustavia in St. Barts for trading booty and for replenishment of ships and crew. Pirates paying taxes? Right. Officially, the tax-free banner rose with the retrocession treaty transferring St. Barts from Sweden back to France in 1878 as it contained two key provisions: the port of Gustavia must remain duty free and the population of St Barts need never pay taxes.

French-American real estate attorney and posh villa host Chantal Decombe-Greaux notes that there used to be an “historic tolerance” for not paying one’s taxes. Non-resident property owners declined to pay in solidarity with residents despite the infrequent enforcement complaint by the French tax office. Decombe-Greaux laments that while this situation seems opportunistic, it caused uncertainty and grief amongst real estate buyers whose ledgers prefer predictable expenses. She, like many islanders, welcomes the clarity a new tax code will bring, not to mention the ability to fund local projects. Indeed, given the sky-rocketing value of property on the island, and island’s popularity with well-heeled travelers, even a modest tax hike will provide St. Barts with a mini-economic engine both for itself and potentially for France.

As France inevitably reduces its funding for St Barts, the island will have to make up the budget shortfall in some way in order to maintain services and infrastructure. The idyllic tax-free days will soon be lost forever. The draft Tax Convention between St. Barts OC and France refers to a discussion of several prospective revenue streams…a tourism tax, a port tax, a transfer tax for real estate and an income tax. Which will be enacted, and when, are open questions. How any new taxes will affect the whim and whimsy of the glitterati, the steadfast locals, or the soul of itinerant beach bums is unknown.

Building for the Future

St. Barts is unique in that its rugged topography helps to limit tourism. The island’s airstrip is one of the shortest in the world, so no large jets can land there, and there are no large docks or deep water ports to accommodate cruise ships. Age-old zoning regulations stated that no building could exceed the height of a palm tree – so no large hotels or resorts were ever built. With room only for small hotels, private villas have long been the primary source of accommodations in St Barts. The island’s appeal stems in large part from these factors.

When Bruno Magras was mayor, he fought without enforceable zoning to maintain green zones and to limit development. Now that France has given St. Barts authority and Monsieur Magras has been elected president, he will be instrumental in writing new laws to govern zoning. Perhaps in anticipation of tougher zoning laws, construction of private villas has increased in the last few years, yet the density of development remains well below that of most other islands.

And what will French president Nicolas Sarkozy, newly elected in May, do with his tiny jewel in the French West Indies? Will Sarkozy’s conservative policies trim the much-esteemed French lifestyle with its annual five-week vacation, 20 national/religious holidays and the 35-hour workweek? Will the laid-back atmosphere and glamorous ambiance of St. Barts become strained under new taxes, new controlling leadership, and a higher profile with France?

A host of changes are taking place on the island and in the bureaucratic maze of French governance. St. Barts is now entering its next phase of evolution; with it comes new leadership, new responsibilities, new public works, new taxes, new zoning and a stern new father-figure president of France. Once a step-child to Guadeloupe, St. Barts is reaching maturity and rising exuberantly into the political and economic limelight of France and its European Union family. Who can imagine how St. Barts will evolve in this new era? Will it bolt for independence? What is next for St. Barts?

The Role of Sibarth & Wimco

Sibarth villa rental company was established in 1975 as the first villa rental firm on the island of St Barts. It set up Wimco in 1983 as a sister company in the US handling global marketing. Together the two companies were responsible in large part for putting St Barts on the map as a vacation destination, and for popularizing villa rentals, and while market share information is not readily shared, today the two companies control the vast majority of villa rentals made annually.

Today, the two companies principals are engaged in the process of the island’s evolving political status. Brook and Roger Lacour owners of Sibarth and their Director of Marketing Anne Dentel keep villa owners up to speed on the latest developments and their implications. Ms Dentel also acts as the Head of the St Barts Hotel Association and thus is a key liaison between the new government and the hotel owners. Christian Wattieu of Sibarth Real Estate counsels interested buyers, and Tim Warburton, President of Wimco keeps their international villa rental clientele informed of the evolution of the political and commercial landscape.