Finance minister: income St. Maarten is 13.9 percent more than budgeted
Hiro: Govt first quarter income increased 11 per cent this year
FRIDAY, 18 MAY 2012
~ Budget for same period under-spent ~
PHILIPSBURG--Government has seen an eleven-per-cent increase in income in the first quarter of this year compared to the same period last year, and has under-spent by some NAf. 13 million for the same period, outgoing Finance Minister Hiro Shigemoto announced on Wednesday.
A total of NAf. 123 million in income was generated up to March. If the income trend continues, the total for 2012 could be some NAf. 490 million, up from the budgeted NAf. 432 million. The budgeted income up to March 2012 was NAf. 108 million.
"This means that up to March 2012, the income is 13.9 per cent more than what is budgeted," the minister explained in a press conference in Dr. A.C. Wathey Legislative Hall.
Dealing with the under-spending for the first quarter, Shigemoto said only three ministries had gone over their budgeted amounts for the quarter, although they were not over budget yet for the year. The Ministry of General Affairs overspent by NAf. 552,648; the Ministry of Public Health and Labour by NAf. 435,928; and the Ministry of Public Housing and Infrastructure VROMI by NAf. 424,781.
Parliament has under-spent by NAf. 512,478; the Finance Ministry by NAf. 2,133,800; the Justice Ministry by NAf. 5,609,801; the Ministry of Education, Culture, Youth and Sports by NAf. 3,615657; and the Ministry of Tourism and Economic Affairs by NAf. 1,717,792.
The balance on the government's current accounts totalled NAf. 38 million up to March 2012. In the same period last year, the amount on the current account was NAf. 20 million.
The government's bank reserves totalled NAf. 127 million on December 31, 2010. Some NAf. 65 million was transferred to the General Pension Funds APS, putting the actual reserve at NAf. 62 million.
The reserves built at several banks in St. Maarten totalled NAf. 65 million as of March 31.
Government paid off a portion of the outstanding debt of NAf. 5 million to APS in the first quarter, using part of the short-term deposit.
Shigemoto took "a very conservative approach" to ensure that reserves would remain intact, to cover at least three months of employee salaries, as a cash buffer in case of any natural disasters and for further repayment of loans.
No new loans have been issued since 10-10-10. However, as a measure to reduce cost, existing pre-financed loans with rates ranging from six to 6.5 per cent were refinanced by issuing a bond with 1.5 per cent interest.
When the United People's (UP) party/Democratic Party (DP) took office on 10-10-10, the budget 2011 had a deficit of nearly NAf. 120 million. This deficit was worked off by the Finance Ministry, under the guidance of Shigemoto, to balance the budget that was approved by Parliament in July 2011.
This resulted in a later start in preparing the budget 2012. That budget received a preliminary positive advice from the Committee for Financial Supervision CFT in February and was approved by Parliament in March.
"We learned from the challenges from the past and we started with the preparations for the budget 2013 in April this year," Shigemoto said.
The policy guidelines for the budget 2013 were sent to the ministries and the higher councils on April 20, with the request that they submit their budgets by May 15 so that the budget 2013 could be presented to Parliament by August 31, as required by the financial supervision regulations.
The Finance Ministry is busy with amendments to Budgets 2011 and 2012, which are expected to be completed in two weeks.
The 2010 financial statements are under review by the Government Accountants Bureau SOAB. The statements for 2011 are in process and "all efforts" are being made to ensure they are ready by August 31.
Shigemoto projects 150 million higher tax revenue for 2013
New tax-system favors residents over non-residents
St. Maarten – The revised tax system is scheduled to be completed by January 2013, outgoing Finance Minister Hiro Shigemoto said at a press conference on Wednesday. The governing accord signed by the National Alliance and the DP with three independent MPs has already announced it intends to speed up the procedures and have the system in place by November 8 – 180 days after it takes office.
Shigemoto did however give a detailed description of the measures that are afoot for taxpayers.
Shigemoto said that the new tax system is a work in progress, aimed at reducing all current direct tax rates, and at increasing the island’s competitiveness. The system will “refocus the economic incidence on taxation on visitors and migrant workers rather than on the local population in a way that will not damage the tourism industry or the wider economy.”
According to Shigemoto, the new system will increase tax revenue “significantly” while it reduces the burden for all residents.
The minister said that the current tax system is “not appropriate for St. Maarten. It is massively complex and creates significant tax evasion and non-compliance.”
Currently annual tax revenue is approximately 378 million guilders ($212.4 million); the new system will generate an additional 149.4 million guilders ($83.9 million) next year, Shigemoto said.
On the downside, Shigemoto announced that the 5 percent turnover tax will remain in place. Alcohol and tobacco will lose their tax free status and become subjected to “an enhanced turnover tax.” Casinos will have to start paying taxes based on the number of slot machines and gaming tables at their establishments.
Shigemoto said that the alternative for replacing the turnover tax with a value added tax would have put a much higher burden on citizens because the rates would have had to be anywhere between 10 and 22 percent.
Residents with income outside of St. Maarten have something to look forward to. Until now, residents are taxed based on their global income. The new tax system proposes to tax residents only on income they earn in St. Maarten.
The taxes on income will go down, effectively putting more money in people’s pockets. The current progressive tax rates – with a top tariff of 43.75 percent – will disappear and be replaced by a new top tariff of just 15 percent. The first 36,000 guilders ($20,225) of income will not be taxed; the next 18,000 guilders ($10,112) is subject to 5 percent, the next tranche of 18,000 guilders is taxed 10 percent; above that the 15 percent tariff applies.
Corporate taxes (now effectively 34,.5 percent will go down to 15 percent, in combination with what Shigemoto described as “a potential choice between tax on profits and a lower tax on turnover for a fixed number of years.”
A potentially controversial proposal is to impose a money transfer tax on non-residents, while residents and businesses with a crib number will be exempt from paying this tax. Currently, the money transfer tax is 1 percent; in the new system, non-residents will pay a higher percentage.
The 30 percent capital gains tax will be abolished; interest on bank balances (currently 25 percent plus a 20 percent island surcharge) goes to 10 percent; for residents with a crib number tax-free accounts will be available and allow tax-free savings up to a certain amount.
Residents and businesses with a crib number will also be exempt from paying taxes on dividends (currently 15 percent plus a 22 percent island surcharge); for non-residents this tax will be 15 percent.
Property rental income will be taxed with 10 percent, timeshare units will be taxed per night and hotels will be taxed via the turnover tax “with potential additional charges.”