Tuitt consults on replacing cost of living adjustment

POSTED: 06/21/12 1:09 PM

St. Maarten – Finance Minister Roland Tuitt met one of the unions representing civil servants and teachers on Tuesday to discuss an alternative for structurally adjusting salaries. The minister wants the unions to think along with the government so that an effective, more structured and affordable system can be found. Tuitt has already thrown out some ideas with the union he met Tuesday and intends to repeat them in other meetings he wants to have going forward.

The matter of structurally adjusting salaries via cost of living adjustments is a point of concern that was first highlighted by former Finance Minister Hiro Shigemoto. Tuitt, Prime Minister Sarah-Wescot-Williams and the Board of financial supervision (Cft) are also concerned about the system and believe it should be replaced.

“We did not have to wait on the Cft to tell us we need to change that method. We already did the research and found out that only two countries in the world that still use Cola. It is an outdated system. If you do a calculation of what the Cola would cost if you keep doing it every year and let’s say inflation is above the 2 percent mark it will cost government between 15 and 20 million guilders to pay it out every year,” Tuitt said.

Later he’d add, “There is no way government could continue to pay 15 to 20 million guilders every year. Do the math if you have to pay 15 to 20 million it means you have to tax the people 15 to 20 million every year because right now we have reached the maximum – 432 million – that we can yield from the current tax system. For that 20 million we have to look at new taxes and how we going to keep looking for 20 million every year. That’s impossible.”

Tuitt also reaffirmed that the government will payout the cost of living adjustment for 2010 in July. The 17 million guilder payout is being doing then so that civil servants and teachers won’t have a heavy tax burden in June when they all received vacation allowance and some received their annual increment in salary.

“I think if we paid out the Cola as well a lot of civil servants would be crying. From a tax perspective it is better to pay it out in July. That will also give government a little time to come up with a way to do it legally. The way that is being chosen is via a pre-payment. Once the documentation is in place. We will have to get an LB (landsbesluit) because it was not budgeted. We will pay it out once nothing extraordinary happens in St. Maarten,” Tuitt said.

Did you like this? Share it:
Tuitt consults on replacing cost of living adjustment by

Comments are closed.