Tuitt devises attractive incentives for tax compliance

POSTED: 11/29/12 3:19 PM

St. Maarten – The Finance Ministry is considering some interesting proposals to bring a 29 million guilders deficit by now and December to balance the budget. Apart from the so called sin tax on alcohol and tobacco that Finance Minister Roland Tuitt told Parliament about last week, he also wants to give errant businesses an incentive if they can pay outstanding taxes by now and December.

“For December, if you are willing to pay your old taxes we are willing to give you a discount or waive the penalties you encountered by the late filing,” Tuitt said as he appealed to businesses to come in and pay their taxes. The additional revenue is sorely needed.

“We are still encountering a deficit. The deficit that we have right now is to the tune of 29 million guilders and we have some items that we are looking at to be able to deal with the deficit. If we can continue as we are doing up to this moment in increasing compliance, I think we can get a great portion of this deficit covered. If we budget some 10 million for next year that will be for the increase in compliance, we think that will be realistic,” he added.

Currently, collections stand at some six million guilders higher than what was collected last year. This Tuitt said means that compliance is a factor that we should be taken into consideration.

Other tools to increase compliance include the higher turnover tax on alcohol and tobacco which is projected to generate between 10 to 15 million guilders and writing off old debts.

“There are two ways to do that in legal terms; to park up the debt, either you give all the old debts a letter or number and when you do queries in the system they do not show up. The other way is to propose the amounts to be written off which will have to go in accordance with the legal process that we have in place.”

He reiterated that writing off old debts would be more effective because it has been proven that when one tries to collect old debts, people resistance is higher than when you try to collect recent debts.

“We also have to have figures that we can work with as a government and if we do not have these old debts in the systems and only the new debts based on realistic figures then we have a figure that we can work with, that will cause us to make more prudent decisions as we go forward.”

Next week he also plans to talk with casinos on the island to discuss the possibility of introducing turnover tax in that sector. This could also generate some additional money, Tuitt believes.

The dividend possibility of the Central Bank which could generate close to 1 million guilders will also be factored in.

In the area of scholarships, it costs the government approximately 4 million guilders annually to award scholarships. Tuitt mentioned yesterday, as he had done before, that if the awarding of scholarships is handed to a private agency, then that agency will be compelled to follow up on arrears. As outstanding payments come in, they will be placed in a revolving fund so that over time, the government will no longer have to allocate 4 million guilders annually.

“If the fund collects from all of those people in the past at a certain point in time, it will become self-sufficient and the government wouldn’t have to contribute.”

Tuitt also used the Council of Ministers press conference yesterday to reiterate his concern about St. Maarten’s debt ceiling, calling the situation worrisome.

“We can spend 29 million on paying interest during a year. If you take that based on the interest rates that we are paying then it calculates to around 620 million guilders that this government can borrow. When we took over the debts of the Netherlands Antilles we got 302 million guilders. If you subtract that you will see only 318 million is left. From 10.10.10 to now we have already absorbed a few million.

Right now there is only space of some 250 million guilders that we can use. If we take a loan of 100 million guilders now, that will only leave a 150 million for next year. If we take out the 150 million next year then the government of St. Maarten will never be able to borrow again. That is one problem that we have to talk to the Dutch about and that is kind of worrisome,” the finance minister said.

He hopes to have the draft 2013 budget balanced by Friday.


Did you like this? Share it:
Tuitt devises attractive incentives for tax compliance by

Comments are closed.