Cft gives negative advice on 2013 draft budget: Government wants to increase tax compliance by 10 percent

POSTED: 01/8/13 11:55 AM

St. Maarten – The board for financial supervision Cft has given the government of St. Maarten a negative advice on its draft 2013 budget, Finance Minister Roland Tuitt said at a press conference yesterday. However, this advice was given before the finance ministry provided additional information. “We were late providing that information; the Cft is now looking at it and it will adjust its advice accordingly,” Tuitt said.

The financial supervisor’s main issue is with tax compliance, the minister said. “The government wants to increase compliance this year by 10 percent. On a budget of 476 million that gives us almost 48 million guilders. We did not budget 48 million, but just 20 million – less than 5 percent of the budget,” Tuitt said.

The Cft is not satisfied with that: it wants St. Maarten to cut the expected additional revenue by half down to 10 million guilders.

“We told the Cft that it is dealing with a different government now,” Tuitt said. “Last year the

Cft got burned with the projection of 23 million guilders in condo tax. They did not want to get burned again.”

The minister said that increased compliance yielded already an additional 6 million guilders last year – leaving a gap of 4 million. “When we present a budget we base it on assumptions. Any risk should be a calculated risk and you have to establish you maximum tolerance to that risk. My contention is that what we have here is reasonable. The Cft ought to accept that risk of 4 million guilders.”

Tuitt noted that the government made sure not to raise taxes that affect the common people: “We looked at the casinos, at alcohol and tobacco and at compliance,” he said. “In addition, we are looking to provide relief for salaries up to 5,000 guilders a month and less. We’re looking at decreasing Gebe-prices and the prices in the economy in general.”

By Friday, the term to react to the first Cft-advice expires. Tuitt said that the government will present its reaction to the financial supervisor that day. “The Cft has sixteen questions and we will be able to answer them all by today (Tuesday – ed.).

The multi-annual budget is included with the draft 2013 budget. The Cft requires this budget also to be balanced. Tuitt said that the 2013 draft contains already one little windfall. “We included 18 million guilders to cover the medical costs of all families. But the National Health Insurance will most likely go into effect per January 1, 2014.”

While the country’s borrowing capacity is limited, Tuitt said that there is 65 million guilders available to execute projects like the purchase of the Emilio Wilson Estate. “In 2011 we could theoretically borrow 602 million guilders, but we inherited a 300 million debt from the Netherlands Antilles. That cut our borrowing capacity in half. During the UP-government another 100 million was borrowed, leaving us with 202 million. If we borrow 100 million this year and another 100 million next year our capacity is used up. It is impossible to continue like this. We have to build our institutions from scratch.”

The minister said that the government did not borrow any addition money last year and that it used 40 million from the general funds to finance projects. “This year we will borrow 65 million for projects,” he concluded.

Lastly, the minister noted that from the projected 38 million in profit tax, the government collected just 20 million last year.

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Cft gives negative advice on 2013 draft budget: Government wants to increase tax compliance by 10 percent by

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