St. Maarten Government advised to tread carefully with Taxand contract

POSTED: 06/7/12 1:09 PM

St. Maarten – Finance Minister Roland Tuitt says the government has been advised to “tread carefully” in its handling of the $10 to $14 million contract with Taxand for the development of a new tax system. The legal advice came ahead of a quote from the Foundation Government Accountants Bureau (SOAB) for a judicial investigation into how the contract was issued.
Tuitt also announced Wednesday that the tax system is a project that will be worked in the future, but the government’s present focus is on improving compliance under the current tax system. Improving compliance was also a priority of former Finance Minister Hiro Shigemoto. Some research has been done already, but Tuitt wants more.
“If we should go with figures we’ve heard in the past, where it is mentioned that the compliance is only between or lower than 50 percent. If you have a compliance rate lower than 50 percent, then naturally better you concentrate your energy on getting the compliance rate up than working on a new tax system. So the new tax system will be worked on in the future, but I think right now the main thing is to get the compliance rate higher than it is at this moment,’ the finance minister said.
Though the new tax system is now a future project, Tuitt has some ideas of how he wants it to go.
“Naturally Country St. Maarten wants a new tax system, but in developing a new tax system, you have to take certain things into consideration and you have to make sure that the new tax system that you come up with will be usable and it’s also something that is adequate for the country St. Maarten,” Tuitt said.
Later he’d add, “The present tax system that we have was not developed for an island situation, because direct taxes is really an instrument that is used by big countries to make something that they want happen, to use that as instrument to make it happen. I could give you an example. If the government does not want a lot of cars to drive on the roads, they will increase the tax relating to cars. If the government wants everyone to own their own home, then the government will implement many tax deductions so that you can benefit to own your home. So direct taxation benefits a policy that government has, however it also is used to deal with the monetary situation within a country. As you know, a small island like ours, the monetary policy, the monetary instruments we can use to influence our economy are limited, using the tax system to influence government policies has been limited in the past and when we come up with a new tax system, we hope that it will be more beneficial to the public and to government in creating the policy and the items they would like to see.”
Prime Minister Sarah Wescot-Williams added that as the government moves forward with both improving compliance and with crafting a new tax system, the government will have to assess its tax collection policy.
“The issue of a tax system has more components that just a system. From all indications government has been presented with a draft of a tax system and naturally we have to look at it and the matters that St. Maarten considers important for a tax system,” the prime minister said.

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