MPs question taxing vacation rental revenues

POSTED: 02/23/12 2:23 PM

St. Maarten – Members of Parliament from the coalition and from the opposition want Finance Minister Hiro Shigemoto to clarify how he intends to collect roughly 48.5 million guilders from people who rent their condominiums as vacation properties. The matter was first brought to the fore by Democratic Party Member of Parliament Petrus Leroy de Weever.

“In this shrinking economy I see 10 percent of new taxes on real estate. I don’t buy that you’re going after foreign home owners and I don’t think that you can realistically collect this. Real Estate Tax has never been applied here even though the laws of the Netherlands Antilles allowed it. Is the minister playing to now apply the law here, because otherwise the amount listed in the budget is far-fetched,” de Weever said.

De Weever and National Alliance MP George Pantophlet are both concerned about whether or not the country could potentially break double taxation agreements by going after the mostly American condo owners. Pantophlet was also curious about how the measure would be implemented.

“Will government investigate whether these people are being taxed in their home countries,” Pantophlet queried.

Independent Member of Parliament Frans Richardson, who is concerned about the measure, asked the finance minister to state how many condos would be subjected to the regulation and pointed out that he’s curious what the finance minister will tell the Board of financial supervision (Cft) about this point when the government submits a report that is due on May 12, 2012.

National Alliance faction leader William Marlin is also curious about how the money will be collected, whether it was “one shot income” and how much money the government will realistically be able to collect using this measure.

“People won’t just roll over and pay,” Marlin said before painting a picture of lengthy battles between the tax office and the people who will be required to pay.

United People’s Party MP Silvia Meyers-Olivaccee is also concerned about the real estate tax. So is National Alliance MP Louie Laveist who said, “What is government’s policy on collecting the 48.5 million without creating ghost towns. It must be explained.”

Higher/new fees

Several MPs also focused in on either hiking current fees or imposing new ones. National Alliance MP George Pantophlet and Democratic Party faction leader Roy Marlin both think it’s time for lottery companies and casinos to pay higher fees. Neither has seen their fees increased in close to 15 years.

“We should look into amending these license fees. What is the problem to get them to pay more money? Also are they up to date on their payments. I believe that especially if the casinos protest an increase in fees they should open their books and show us why they can’t pay more,” Pantophlet said.

R. Marlin “kind of” agrees with Pantophlet that both lottery companies and casinos are not paying “their fair share” and he wants the fees brought in line with “modern day reality.” Marlin also believes that parliament and the council of ministers must decide whether they will increase fees paid by remittance companies. He believes there is too large a discrepancy in what these companies – Moneygram and Western Union – collect in fees and what they pay for government. President of the Central Bank of Curacao and St. Maarten Dr. Emsley Tromp already said on February 7, 2011 that the decision to increase the fees lies with parliament. He was responding to questions from R. Marlin.

“As long as expatriates are present we will have people sending money abroad, but I don’t think that increasing these fees is the answer to more revenue. I think that has more to do with making sure that everyone pays their fair share of taxes and fees. So compliance has to be improved,” Tromp said in a central committee meeting roughly a year ago.

The D.P. faction leader said in 2011 and still believes now that the tax base must be broadened so that everyone is contributing to key services like education, justice and infrastructure. He also added the three to four fast ferry companies that operate on the Dutch side to the list of companies that should contribute more.

Raising revenue/cutting costs

Meyers-Olivacce and UP faction leader Romain Laville also pressed the government to look at a multitude of ways to raise more revenue and cuts costs. Meyers-Olivacce believes that tax compliance should be increased and that a special patrol team be put together that will fine people for violations of the traffic ordinance.

“There’s a lot of illegalities in driving,” Meyers-Olivacce said

Later Laville would add, “There is a norm to not look at how money is spent and use it in the best way possible. We have asked the people to tighten their belts and cut corners but I don’t see government leading by example. There are simple ways for us to lead by example”

That statement was the preface to suggestions like installing solar panels on the government building as a means to save 60 percent on the electricity bill, appraising government vehicles once a year and paying the depreciated value and reducing paper use. In the governing program – A foundation of hope for our country – the government has committed to reducing paper use by 50 percent.

Laville believes the savings from his suggestions could be invested in programs that will provide employment to young people in the districts.

Discrepancies

Members of Parliament from the coalition and the opposition also took time to point out what they viewed as discrepancies in the budget. MP de Weever said that the amount stipulated for interest payments on behalf of the Foundation Upkeep Sports Facilities was “not enough.” Pantophlet would later ask for the most recent financial statement from this foundation and what is the balance on the loan that was taken to build the Melford Hazel Sr. Sports Complex in Sucker Garden.

United People’s Party MP Dr. Ruth Douglas also questioned why the Belvedere Community Center Foundation would get 1.6 million guilders in subsidy this year while the Dutch Quarter Community Centre got none, why the hospital would get only 1.2 million and why there was no allocation for the Voluntary Korps St. Maarten (VKS). Dr. Douglas also asked the finance minister to clarify how the fire and ambulance department generate the revenue listed under them.

Service

MPs from basically all factions called for each minister to focus on improving service in their respective ministry. The call began with independent MP Patrick Illidge who is not convinced that “country St. Maarten is up and running well.”

“It’s about the service. Please spend time on job creation and use what’s in your budget to the best of your ability,” Illidge said.

Meyers Olivacce also called for improved services because she feels trainings she’s heard of did not go far enough.

“Everyone should be treated equally,” the UP Party MP said.

Faction colleague Johan Leonard added, “Service needs to be upgraded in the departments. We should find a more caring way.”

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