Projected increase in revenue practically cut in half: Government agrees to cut expenditures in 2013

POSTED: 01/25/13 1:13 PM

GREAT BAY –St Maarten will have to cut its expenditures in the draft 2013 budget by 41 million guilders, the chairman of the board for financial supervision Cft Age Bakker said yesterday afternoon in a meeting with the Central Committee of parliament. The amount consists of 25 million guilders in sheer expenditures, and 16 million that will have to go towards replenishing the funds of the SZV. “The government needs one or two weeks to come up with the necessary measures to achieve this,” Bakker said.

Part of the central committee meeting was attended by class 4 of the St. Maarten Academy and their teachers. Bakker said that the Cft met yesterday morning with the Council of Ministers and that an agreement had been reached about the necessary changes to the draft budget. “We are not there yet, but this is an important visit. We need to agree on a budget with a positive advice from the Cft,” Bakker said.

The Cft-chair said that the cooperation from the Finance Ministry and Finance Minister Tuitt had been excellent. “Minister Tuitt did a good job of getting the right picture together,” Bakker said.

To arrive at a realistic budget, it must show all the expenditures and all the legal liabilities the government has. “In the past not all these expenditures were in the budget,” Bakker noted. “We are not criticizing anyone; we are just noting that there is an improvement in the financial management. The quality of this year’s budget will be much better than that of previous ones.”

The Cft realized that the government would have to achieve a 15 percent increase in revenue this year to cover all projected expenditures. “We have to be realistic. 15 Percent is a lot,” Bakker said. “There are not many countries able to achieve that. The economic environment is still not easy; the Central Bank projects a growth for 2013 of 1 percent.”

St. Maarten wants to increase state revenue through tax measures. Concrete steps will be taken to improve tax-compliance. There is an impressive package to increase the tax-base,” Bakker said.

But in spite of this impressive package, the financial supervisor advised the government to be conservative with its projections and to get its expenditures in line with a lower projected income.

Bakker urged caution, saying that St. Maarten should not consider itself richer than it really is. “That is a mistake the country cannot afford. St. Maarten’s liquidity-position is precarious because capital expenditures have been paid from the country’s reserves, instead of contracting loans. You cannot keep doing that in the long term.”

Bakker said that in 2012 the government had realized an increase in revenue of 4 percent and that the ambitious increase of 15 percent for 2013 was a bridge too far. “So we agreed on a more realistic increase of 8 percent; that will still be difficult to achieve.”

Bakker said that the budget the government will shortly present means “a big step forward” towards a balanced budget. “This will also alleviate the precarious liquidity-position and set the stage for a government able to make the necessary investments in infrastructure.”

DP-MP Roy Marlin noted that the discussions with the Cft are the same every year. “In half a year we will be here again,” he said. Our discussion should not be with the Cft but with our government.”

Marlin said that the government ought to make dividend and investment policies by its government-owned companies a priority, together with improved tax compliance. “2002 Was the last year that we collected 1 million guilders in dividend from our telecom provider TelEm. The airport is investing $140 million and for the next15 years there will be no dividend coming. Thank God the harbor is paying us a 5 million guilders concession fee every year.”

Marlin said that broadening the tax-base, as the government wants, will not go from one day to the other. “We have to look at those that are operating under the radar,” he said. And we have to take action on simple little things, like companies from the French side who come here to deliver goods and do not pay turnover tax.”

 

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