Dutch minister Plasterk lifts higher supervision over St. Eustatius

TUESDAY, 11 DECEMBER 2012

ST. EUSTATIUS–Minister of Home Affairs and Kingdom Relations Ronald Plasterk has informed the Dutch Parliament’s Second Chamber that the preliminary supervision imposed on St. Eustatius due to its worrisome financial situation was lifted as per Friday, December 7.

In a letter sent to the Second Chamber on that date, Minister Plasterk indicated that several improvements had been realised, among which were the amended budget of 2012 and the balanced budget of 2013. The minister also mentioned that the annual accounts were submitted on time, that an action plan had been drafted to improve financial management in 2013, and that a new Head of the Finance Department had been appointed.

Statia was put under preliminary supervision on November 11, 2011, by former Minister of Home Affairs and Kingdom Relations Piet Hein Donner, based on the law FinBES, Article 35, sub 5.

According to Minister Plaskerk, there was no need to extend the supervision, since Statia has complied with the conditions set forth by the Committee for Financial Supervision CFT.

CFT advised Minister Plasterk on December 4, not to extend the preliminary supervision, because Statia complied with the four conditions set by CFT.

These were an approved and balanced amendment to the 2012 budget; a balanced budget for 2012, which was timely approved by the Island Council; a timely submission of the annual statements over 2011, which had to be approved by the Island Council; and the preparation of a plan of approach concerning the improvement of financial management for 2013.

As a result of the actions, the preliminary supervision for the budget was lifted immediately.

 

Plasterk is tevreden over St. Eustatius

11 DECEMBER 2012

Minister Tuitt: St. Maarten’s financial outlook ‘not really gloomy’

FRIDAY, 23 NOVEMBER 2012

~ Considering increasing ToT on tobacco, alcohol ~

PHILIPSBURG–”It is not really gloomy, but it is not where we want it to be,” Finance Minister Roland Tuitt told Members of Parliament (MPs) on Thursday when he reported on the country’s financial state of affairs.

The minister also signalled government’s intention to increase the Turnover Tax (ToT) on tobacco products and alcohol as a means of raising more revenue and announced that government has earmarked some NAf. 1 million in the 2013 draft budget to cover school fees for primary schools pupils and that legislation to increase the old age pension to NAf. 1,000 is being worked on.

The ministry is still working on balancing the 2013 budget, which appears so tight at present that “little room” is left for new policies because of the debt matrix in which government must work.
As he has done in the past weeks, the minister pointed out that his ministry had been working diligently to fill the budget gaps where they exist, such as the NAf. 21 million gap created by the mostly uncollectable back taxes from foreign condo owners. He pointed out that this was a situation created by the former government.
So far, investments of NAf. 5 million each have been made in the Ministry of General Affairs and Finance, NAf. 1 million for Justice, NAf. 4 million in education, NAf. 50,000 in health care, etc., NAf. 131,000 in tourism and NAf. 17 million in infrastructure VROMI.

The increases in the ToT on tobacco and alcohol will not be a deterrent to the country’s sales of those products to tourists who stock up here by buying duty-free. Tuitt called them “pleasure items” for people that ultimately affect government, if measures are not taken. Alcohol and tobacco use leads to several health concerns and causes a drag on the health-care system.

MP Roy Marlin (Democratic Party (DP)) was not convinced about the increase of ToT on cigarettes and alcohol due to the accumulated effect of the tax.

MP Johan Leonard (United People’s (UP) party), while being against the use of tobacco and alcohol, said he didn’t think a tax increase would make sense from a health point of view, because people would still use it.
MP Dr. Lloyd Richardson is not in support of the sale and promotion of alcohol and tobacco. He said car-racing was more beneficial to the country and would be a booster for the low-season months as would a cricket ground.
MP Louie Laveist (National Alliance (NA)) asked how the increase or introduction of the ToT on the two items would impact the country’s duty-free status. “I think a tax on alcohol and tobacco will become a burden due to abuse/use,” he said.

The minister again voiced his view that the Dutch Government should not leave St. Maarten without social aid, when they are busy giving similar aid to other countries in the world. “Why give to the rest of the world and not your brother and sisters in the Dutch Caribbean?” he asked.

MP Gracita Arrindell (UP) recalled that she had warned about the supposed debt relief the Dutch Government had promised to give St. Maarten for a good starting point as a country. She suggested the government look into the Intellectual Property Bureau as a source of revenue and to get the Committee on the division of assets and liabilities of the Netherlands Antilles to complete its work soon.

The 2012 budget will require some amendments to bring it in line with the revenue collected and other changes. The numbers are showing that revenues stand at NAf. 320 million, while expenditures are at NAf. 326 million, leaving a shortfall of some NAf. 5 million to be covered at present. Some NAf. 32 million is on the capital accounts and government is working on acquiring a loan to carry out some much-needed work.

The several ministries have spent some 75 per cent of their budgets already.

Taking all the figures into consideration, receipts for 2012 have been better than 2011, although collections have “not reached where we want it to reach.”

To address increasing cost, Tuitt said a personnel stop may be required. This has already been suggested by the Committee for Financial Supervision CFT. Marlin called for government to clean up its apparatus and remove people who are not reporting to work and find work to keep others who are there with nothing to do. He said the Economic Affairs Department needs help, because business licences and other permits are still taking a year to process.

“We must look for additional revenues for 2013,” the minister told MPs. As he is not in favour of increasing taxes, other avenues for revenue are being explored such as dividend payment from the Central Bank of Curaçao and St. Maarten. The bank had generated some NAf. 26 million for licensing fees annually in the days of the Netherlands Antilles. Now, Curaçao and St. Maarten have claims on the fees. Based on calculation, the licensing fees could bring in an additional NAf. one million.

Stimulating the Bureau Telecommunication to generate more money, creating a dividend policy to get funds from government-owned companies and collecting a dividend from St. Maarten Telephone Group of Companies TelEm and United Telecommunication Services (UTS) were some other possibilities mentioned.

The airport doesn’t pay a dividend, but government has “to tread carefully,” because one clause in the airport loan agreement is that no dividend can be paid while the loan is running.

MP George Pantophlet (NA) said he believed the airport and harbour companies could pay more to government to help the financial situation.

Government is also trying to find a solution for the “new government administration building” on Pond Island; some NAf. 24 million is needed to cover the Build, Own, Operate and Transfer (BOOT) fees. Government Accountants Bureau SOAB has “unravelled that BOOT fee” and has suggested the interest paid needs to be taken out of the sum, instead of presented as part of the rental payment. Tuitt said the contract would have to be looked at very carefully to see what could be done. If government had to put the interest separate, this would further increase the growing debt.

With the debt growing and other issues arising, St. Maarten could be pushed into a state where, for example, if it seeks a loan of NAf. 42 million now, the country may not be able to borrow again for as long as the CFT exists.
The country’s liquidity position is “positive.”

Tuitt said he requested a meeting with Parliament to outline the state of affairs and because be wanted the country “to start the year on the right foot.”

MPs Jules James (UP), and George Pantophlet and Hyacinth Richardson of NA also posed questions to Tuitt about the financial situation and other related topics.

The Central Committee of Parliament meeting was paused until further notice to give Tuitt time to respond to the questions.

The meeting did have a hitch. President of Parliament MP Rodolphe Samuel (NA) had closed off the first round of meeting very swiftly after the minister made his presentation. When he paused to see which MP wanted to speak, no one was ready or willing so he closed the round. However, this was protested, especially by James. The end result is that the “second round” will be treated as the first round of debate.

Dutch minister Spies compliments St. Maarten, slams Curaçao

FRIDAY, 07 SEPTEMBER 2012

THE HAGUE–St. Maarten is on the right track, while Curaçao is not, stated Dutch caretaker Minister of Home Affairs and Kingdom Relations Liesbeth Spies at a gathering with the Antillean community in The Hague Wednesday evening.
St. Maarten has made strides where it comes to budget discipline and financial management, according to Spies, who largely attributed the improvements to St. Maarten’s new Finance Minister Roland Tuitt. She said St. Maarten had faced difficulties in presenting timely and balanced budgets in 2010 and 2011, but the 2012 budget had been ready at an earlier time.

Curacao, on the other hand, so far hasn’t managed to present a timely and balanced budget. She said the July 13 instruction by the Kingdom Council of Ministers ordering Curaçao to balance its 2012 budget and to include the 2011 deficit had been necessary.

“Things would have gotten out of hand financially if we allowed Curaçao to have it their way. Budget cuts and policy measures are necessary, because otherwise the problems would have been even bigger next year. When you don’t take action, things only get worse. The worst thing you can do is to sit on your hands and do nothing,” she said.
The Financial Supervision Law was arrived at jointly and approved by Curaçao, St. Maarten and The Netherlands. “Financial supervision wasn’t instituted because we are all good at bookkeeping, but because having healthy financial management is essential for a country and the process to build that country, for the people and the facilities,” Spies said.
The Minister made clear that The Netherlands would not pay off the debts of the overseas countries again. “The time that a rich sister or brother would foot the bill if you couldn’t pay it are over.”

She said that Curaçao had submitted an amended 2012 budget in time for the September 1 deadline set by the Kingdom Council of Ministers and that the Committee for Financial Supervision CFT was looking at it.

Spies again voiced her concerns about the Central Bank of Curaçao and St. Maarten (CBCS). “It is very bad when an institution that is so essential in the building up of your country doesn’t function. A breakthrough must come quickly.”
The Minister said that St. Maarten still had work to do in the area of Safety and Justice. Execution of the plans of approach to improve this sector has made insufficient progress and that is why the plans were extended by two years.

“People may demand of their government that it makes a maximum effort to tackle crime. But a solid judicial system is also essential for St. Maarten’s number-one economic sector: tourism. You have a major problem if the people on all those nice cruise ships don’t want to come off, because they don’t feel safe. Tourism is the cork on which the economy drifts,” she said.

St. Maarten government still working to erase its NAf. 100-million deficit

WEDNESDAY, 29 AUGUST 2012

PHILIPSBURG–Government is working on cutting the deficit in the draft 2013 budget by NAf. 100 million before the September 1 deadline for submission to the Committee for Financial Supervision CFT. St. Maarten’s budget is not allowed to have a deficit, according to Kingdom regulation.

Finance Minister Roland Tuitt told the press on Wednesday that if the adjustments could not be made by the deadline the process would not take longer than another week to complete. Government is working on achieving a total operating expense of some NAf. 432.5 million, the same as in 2012.

The deficit has come about for the individual budgets of the seven ministries. The ministries have put forward their budgets with their desired projects and policies. The Finance Ministry’s task now is to work with the ministries to cut away non-essential projects to get the country’s budget in line with the required budget norms.
The individual ministry deficits do not all arise from ministers’ projects. In the case of the Justice Ministry, for example, agreements have been made with the Dutch Government to build up the justice system in a specified period, Tuitt pointed out.

Government is waiting for a new government to take office in The Netherlands to begin discussions about budget norms and expectations placed on St. Maarten to have all of its institutions in order without structure or funds like Curaçao, Tuitt said.

Meanwhile, amendments to the 2012 budget have been reviewed by the Advisory Council and will soon make their way to Parliament for approval. The amendments cover some NAf. 17 million in Cost of Living Adjustment (COLA) payments for civil servants (including teachers) and filling the NAf. 21-million hole left by not collecting back income tax from non-resident condominium owners.

CFT approves draft budget amendments St. Maarten

THURSDAY, 12 JULY 2012

~ ‘We got a clean bill … came out shining,’ says Tuitt ~

PHILIPSBURG–The draft amendments to cover the some NAf. 38 million deficit in the 2012 budget have been approved by the Committee for Financial Supervision CFT and “no other stipulations” have been made on the changes, Finance Minister Roland Tuitt said Wednesday.

He told the press the CFT had requested only additional information on a number of items not attached or related to the budget amendments. The amendments still have to be approved by Parliament by the end of the month to make it possible to pay out the NAf. 17 million cost-of-living adjustment (COLA) to civil servants.

“We got a clean bill from CFT. … This government went into the process with CFT and came out shining,” said Tuitt, a former CFT board member.

Covering the budget deficit are the more than NAf. 2.6 million collected so far in gasoline excise tax, NAf. 5 million in wage tax, and NAf. 1 million by the Court of Justice. Those increased amounts together with the already-announced additional amount of NAf. 17 million collected in Turnover Tax (ToT) will assist in keeping the budget at NAf. 432.5 million.

Removed from the budget are NAf. 1 million each for Succession Tax, as requested in a motion passed by Parliament; profit tax; and transfer tax.

Another contributing factor to keeping the budget balanced is the determination that the NAf. 7.1 million earmarked for the execution of the Plan of Approach for the Justice Minister can be reduced to NAf. 3.1 million. These are some of the adjustments made.

The total operating expenses for 2012 are budgeted at NAf. 432.5 million, an increase of NAf. 11.6 million or 2.8 per cent, compared to 2011.

The CFT asked for more information about the plan of approach for the strengthening of the tax office. Some six people will be hired for the department to boost efficiency and fill vacancies.

Compliance with the Public Expenditure and Financial Accountability (PEFA) specifications was another area about which CFT wanted information. Tuitt said the country’s last evaluation for the some 28 International Monetary Fund (IMF) indicators “was nothing to boast about.”

Because of that evaluation, government has developed a five-point financial plan to help the country “get at least a ‘B’” at the next check-up. That plan has been submitted to CFT for review.

Government also has to focus on re-regulation of social premiums, specifically pension, Tuitt said. A report on the pension situation has been compiled and shared with CFT.

“We have to deal with the age issue,” the minister said, adding that a move from pension age of 60 to 65 was necessary to continue to make the pension fund viable. Another change on the pension front will be a change from the calculation of a pension of 70 per cent of the worker’s last salary to a middle or median calculation of the salary prior to the last one.
These two changes would allow the payments “to become more manageable” for the pension fund to pay out. Focus also will be placed on ensuring more people are paying into the pension fund than receiving benefits.

The country’s pensioners group is still small, so measures have to be taken to make sure the group does not become too large, the minister said.

CFT has also requested the financial statements of 2009 and 2010. These will be shared.

Increased tax collection fills hole in 2012 St. Maarten budget

THURSDAY, 05 JULY 2012

PHILIPSBURG-Increases in the amounts collected from several taxes have helped to plug the hole in the 2012 budget created by the removal of the NAf. 21 million in income tax from non-resident condo owners and the adding of the NAf. 17 million Cost-of-Living Adjustment (COLA) for civil servants.

Finance Minister Roland Tuitt explained on Wednesday that more than NAf. 2.6 million has been collected so far in gasoline excise tax, NAf. 5 million in wage tax, and NAf. 1 million by the Court of Justice.

Those increased amounts together with the already announced additional collected NAf. 17 million in Turnover Tax (ToT), will assist in keeping the budget at NAf. 432.5 million.

Also removed from the budget are NAf. 1 million each for Succession Tax as requested in a motion passed by Parliament; profit tax and transfer tax.

Another contributing factor to keeping the budget balanced, according to Tuitt, is the determination that the NAf. 7.1 million earmarked for the execution of the Plan of Approach for the Justice Minister can be reduced to NAf. 3.1 million. The figure relates to personnel expenses as does the COLA payout for a budget amendment is not needed for this shift.
With the combined changes, the 2012 “will remain balanced,” said Tuitt.

Additional questions from the Committee for Financial Supervision CFT about the pending budget amendments were answered by government on Tuesday. Tuitt is now looking to the approval of the changes by CFT and Parliament. It is possible that a session of parliament will be held during summer recess that starts this week. The budget amendments need to be approval by Parliament and the CFT for the COLA payout to be possible at the end of this month. The COLA was not originally budgeted for in the 2012 budget.

The total operating expenses for 2012 are budgeted at NAf. 432.5 million, an increase of NAf. 11.6 million or 2.8 per cent, compared to 2011. As required by law, the total operating income and expenses are balanced; the budget has no deficit and no surplus.

Suppletoire begroting 2012 St. Maarten bij Cft

MAANDAG, 25 JUNI 2012

PHILIPSBURG — Het College financieel toezicht (Cft) heeft onlangs de suppletoire begroting van St. Maarten ontvangen van minister van Financiën Roland Tuitt. De aangebrachte wijziging zal worden bestudeerd en uiterlijk 2 juli wordt een advies verstuurd naar de regering.

Het Cft had de regering verzocht een suppletoire begroting in te dienen waarin de geplande inkomsten aan belasting over huuropbrengsten van eigenaren van onroerend goed die in het buitenland wonen, zijn verwerkt evenals uitbetaling van het resterende gedeelte van de indexering, de toelage voor kosten voor levensonderhoud (COLA). Het gaat om een totaalbedrag van 17 miljoen gulden. Men heeft vastgesteld dat de belasting over huuropbrengsten niet kan worden geïnd terwijl de uitbetaling van indexering oorspronkelijk niet in de begroting was opgenomen.

CFT stelt Sint Maarten deadline voor begroting 2012

19 MEI2012

PHILIPSBURG – Het College financieel toezicht (Cft) heeft het bestuur van Sint Maarten een deadline gesteld.

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

 05/18/12

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.”

 

St. Maarten budget deficit for 2012 possibly 39 million guilders

TODAY:

Cft urges government to present budget amendment: Deficit 2012 possibly 39 million guilders

05/16/12

St. Maarten – Outgoing Finance Minister Hiro Shigemoto leaves a 2012 budget behind with a deficit that could be as high as 39 million guilders ($21.66 million). This appears from two letters from the board for financial supervision Cft.
The 2012 budget projects 21 million guilders in revenue from tax on rental income from foreign real estate owners, but so far the tax inspectorate has issued just 11 realistic tax assessments for a total of 23,621 guilders ($13,123). “That is about zero percent of the amount it should have been based on the number of tax returns that were sent out,” Cft-secretary Cees van Nieuwamerongen wrote in a letter dated April 20.

To collect the 21 million guilders in taxes this year, the tax inspectorate targeted 500 foreigners. During a meeting of the Cft with the Taskforce Financial Management on April 10, it appeared that of these 500 real estate owners, 402 had been traced and registered as taxpayers.

The group of 402 was showered with 1,777 tax return forms for the past five years – 71 percent of the total that had to be sent out. The Cft notes that of these 1,777 tax returns, 630 were returned and they were all so-called zero-returns, meaning that these taxpayers filled out their returns in such a way that they owe the tax office nothing.

The tax inspectorate then sent out 132 assessments. Of those, the Cft says in its letter, only 11 are realistic. The blistering conclusion the Cft arrived at was this: “Of the target group of 500 people 80 percent received tax returns and up to now this has yielded almost zero percent of the target amount in realistic assessments.”

The Cft urges St. Maarten in the letter to present a budget amendment as soon as possible. St. Maarten should have informed the Cft by May 4 the latest about the way it intends to balance the 2012 budget and within which term the budget amendment will be realized.

In the same letter, the Cft notes that St. Maarten has abided by the instruction to limit monthly expenditures to 1/12 of the 421 million guilders budget, of 35 million guilders per month.

Last week, on May 9, the Cft sent another letter to Prime Minister Wescot-Williams and Parliament President Gracita Arrindell. In it, the financial supervisor establishes that St. Maarten did not react to its request to present a budget amendment within fourteen days. By doing so, the government violated the Kingdom Law that regulates financial supervision.

But there was more bad news: the Cft wrote that St. Maarten announced plans to pay civil servants 17 million guilders in cost of living adjustment, after it had received the April 20-letter.

“These additional expenditures were supposedly reserved in earlier years; they ought to appear as provisions in the annual accounts,” the Cft wrote.

But so far, the Cft only received a draft annual account for the period up to October 9, 2010. The deadline for submitting this account is long overdue. The annual account for the prolonged book year 2010 (from October 10) /2011 has to be submitted to the Cft by August 31 of this year.

“As long as the Cft does not have these annual accounts at its disposal it cannot make a statement about the adequate cover for these additional expenditures.” If the 17 million in cost of living adjustment has to come out of the 2012 budget, a budget-neutral amendment is necessary, the Cft indicated.

In its April 20-letter the Cft also took notice of the motion the parliament passed to take forego the collection of succession taxes; this revenue was projected to be 1 million guilders in 2012. “If this motion is executed, it will have to be part of the budget amendment.

The Cft has asked Prime Minister Wescot-Williams and Parliament President Arrindell to react to its May 9 letter within 14 days; the deadline for a reaction is therefore May 23 – next week Wednesday. By that day, the Cft expects a proposal to amend the 2012 budget in such a way that it is again in line with article 15 of the Kingdom law that stipulates that the budget must be balanced.

In the meantime, the deadline for the government to submit its first progress report to the Cft for 2012 has passed yesterday. That report should have addressed issues like the strengthening of the tax inspectorate, the 5-year plan Pefa (public expenditure and financial accountability), the long term financial development for old age pensions and social funds, as well as an analysis of the annual accounts 2009 and 2010 and their effect on the 2012 budget.

St. Maarten 2012 budget is signed into law by minister Shigemoto

WEDNESDAY, 11 APRIL 2012 00:02

PHILIPSBURG–The 2012 budget is finally formally a law with Finance Minister Hiro Shigemoto signing the document on Tuesday after receiving it recently with Governor Eugene Holiday’s signature from the Governor’s Cabinet.

The Committee for Financial Supervision CFT has not yet rendered its formal advice on the budget. Government anticipated that that advice will not differ from the positive one received from CFT prior to the tabling of the budget in Parliament in March.

The budget was approved by Parliament on March 22, by the nine votes of Members of Parliament (MPs) supporting the United People’s (UP) party/Democratic Party (DP)/Illidge coalition. The five members of opposition National Alliance (NA) and independent MP Frans Richardson did not vote on the budget, opting to leave the General Assembly Hall before they were called on to vote.

The total operating expenses for 2012 are budgeted at NAf. 432.5 million, an increase of NAf. 11.6 million or 2.8 per cent compared to 2011. As required by law, the total operating income and expenses are balanced; the budget has no deficit and no surplus.

Shigemoto and the Finance Ministry are busy working on several budget amendments. The minister and CFT representatives had stated during the budget compilation process that amendments would be necessary for the country’s finances to keep pace with local and global impacts.

These amendments are being worked on simultaneously with the preparation of the 2013 draft budget.

2012 budget approved by St. Maarten parliament after four days of deliberations

FRIDAY, 23 MARCH 2012

PHILIPSBURG–The country’s budget for 2012 was approved on Thursday night, bringing to a close four days of debate by Members of Parliament (MPs) and presentations by the Council of Ministers.

The debate was punctuated by the tabling of several motions instructing government to come up with solutions to several issues. The majority of the motions were adopted by Parliament.

The budget was approved by the nine votes of MPs supporting the United People’s (UP) party/Democratic Party (DP)/Illidge coalition. The five members of opposition National Alliance (NA) and independent MP Frans Richardson did not vote on the budget, opting to leave the General Assembly Hall before they were called on to vote.

The total operating expenses for 2012 are budgeted at NAf. 432.5 million, an increase of NAf. 11.6 million or 2.8 per cent compared to 2011. As required by law, the total operating income and expenses are balanced; the budget has no deficit and no surplus. The total NAf. 65.6 million in capital expenditures will be financed in part by government’s available cash (NAf. 23.8 million) and bonds to be issued (NAf. 37.3 million).

NA leader MP William Marlin said before leaving that he and his fellow NA members could “not find themselves in all aspects of the budget” although they were “in favour of many elements.” They also don’t believe it is truly balanced.

Marlin also rebutted statements from MP Leroy de Weever (DP) that NA was against the budget that would make it possible for government to purchase land from the James family after drawn-out negotiation, a plea made consistently throughout the Central Committee meeting and plenary session of Parliament on the budget.

Marlin said the budget was not about the James family and that NA also was not against subsidies for non-governmental organisations or even against salaries for MPs, which are contained in the budget.

De Weever called the NA’s and Frans Richardson’s stance against the budget “indicative of hypocrisy.”

MP Roy Marlin (DP) also criticised the NA and Richardson for walking out instead of supporting the budget. He said the budget was voted on first by chapters and then as a whole, and if NA truly wanted government to resolve the land purchase with the James family and was in favour of the subsidies, NA members should have voted on those chapters.

“I am not a coward,” MP Johan “Janchi” Leonard (UP) said as he voted for the budget. He said the MPs who had left without voting had demonstrated that they were “not capable of taking responsibility” and they should have stayed and told the people they represented they were against the budget.

His comment about cowardice stemmed from voting against a motion to protect Emilio Wilson Estate from development after being a part of the People’s Progressive Alliance (PPA) whose manifesto called for protecting the estate.

After the meeting closed, President of Parliament Gracita Arrindell and General Secretary of Parliament Jozef Semeleer signed the letter to Governor Eugene Holiday informing him that the budget, which is presented in the form of a law, had been approved by Parliament. The budget law will take effect once Holiday signs it. The letter and the budget will be delivered to the Cabinet of the Governor today, Friday.

The budget still has to clear one more hurdle: scrutiny by the Committee for Financial Supervision CFT. The committee has already given preliminary approval of the draft budget, although it has some concerns about government’s intention to raise some NAf. 21 million in back rental taxes owed by non-resident condo owners.

The Finance Ministry has provided a detailed plan of approach on exactly how it will execute this action and a timeline was included in the plan of approach, making it possible to oversee the project and determine ahead of time whether corrective measures were necessary, Finance Minister Hiro Shigemoto had said earlier in the week.

Motions to remove land and inheritance taxes approved by St. Maarten parliament

FRIDAY, 23 MARCH 2012

~ No majority support for motions on pond, estate ~

PHILIPSBURG–Motions to remove the inheritance (succession) tax of one million guilders from the 2012 budget and to put the land tax collection on hold until new legislation is tabled within 60 days to eliminate it were adopted unanimously by Parliament on Thursday night, shortly before the budget itself received approval from a majority of the Members of Parliament (MPs).

The draft budget amendment that accompanied the inheritance tax motion and another to increase the subsidy to the Pony League were withdrawn by Democratic Party (DP) and United People’s (UP) party MPs together with independent MP Patrick Illidge after consultation with the Council of Ministers and it was explained that any amendment could obstruct approval of the budget at this stage.

An amendment would have meant that the budget would have to be reviewed again by the Advisory Council, despite the amendment being budget-neutral.

Another concession related to these two motions was that the shifting of funds within the budget to cover the shortfall created by the removal of the NAf. 1 million budgeted for inheritance tax collection and the increase of the Pony League subsidy would be left to the discretion of the Council of Ministers.

In the case of the Pony League, it was recommended that the St. Maarten Carnival Development Foundation subsidy be cut. However, Tourism and Economic Affairs Minister Franklin Meyers suggested leaving that subsidy intact and instead reallocate money from the tourism budget for the Pony League and the Little League. An increase for the latter league had been suggested by National Alliance (NA) leader MP William Marlin in his presentation earlier in the day.

Meyers explained that NAf. 210,000 had been budgeted for the drafting of the timeshare ordinance, but this was no longer needed because the professor who drafted it had not charged for his work.

Also adopted unanimously were the motions tabled by MP Romain Laville (UP) on regulation of pawnshops and the request to government to start a study within 90 days on alternative energy, especially the use of LED lights. Justice Minister Roland Duncan had recommended that Parliament pass the pawnshop motion, adding that his ministry was ready to execute it by drafting legislation in consultation with the Ministry of Tourism and Economic Affairs.

Mullet Pond

Laville was the only member of the UP/DP/Illidge coalition to vote for the motion to protect Mullet Pond as tabled by independent MP Frans Richardson. The motion was rejected by Parliament because it only received seven of the 15 votes. The five NA members, Frans Richardson and Laville voted for the motion.

Laville said not all MPs were “cut from the same cloth” and that he supported the motion because it was for protecting the pond, a move that would allow him to “sleep good tonight.”

Justifying his vote, MP De Weever said the motion would “jeopardise the future development” of the country and do a “disservice” to the Ministry of Infrastructure VROMI which is busy with development and zoning plans. MP Roy Marlin expressed the same sentiments.

MP William Marlin (NA) said it was time to do what was good for the country and not let the people’s patrimony be further destroyed. Similarly, MPs George Pantophlet and Louie Laveist saw the need to protect the pond.

Emilio Wilson Estate

The motion to protect Emilio Wilson Estate from any development also did not receive majority support. MP Frans Richardson said former members of the People’s Progressive Alliance (PPA) who were now UP MPs owed the people an apology, because the PPA manifesto had called for the purchase and protection of the estate by government.

MP Louie Laveist (NA) suggested that “a 50 cent fee” be levied on all slot machines, or a US $2 environmental fee for visitors be put in place to get money to pay off any loan government obtained to purchase the estate. Should those alternatives not be acceptable, the people would be willing to buy the estate by paying a “one or two cents gasoline excise fee.”

MP Laville said that although he believed the estate should be protected and “regretfully” voted against the motion, he was not fully clear on the scope of the planned recreational attraction or on the particulars of the estate. He said businesses and nature reserves coexisted in other parts of the world, citing Niagara Falls as an example.

MP Roy Marlin, who also voted against the motion, cited the commingling of business and reserve at Brimstone Hill in St. Kitts. He said that there was no money in the budget to buy the estate and that no MP had brought any solution throughout the debate.

MP De Weever said the motion was “full of complicated messages” and the way it was worded was asking Parliament to get into trouble. He said he could not understand why there was the constant reminder about the estate’s link to slavery and there should be a moving away from this.

MP George Pantophlet (NA) did not like the reference about forgetting about slavery and said asking people to forget about slavery was like asking the Jews to forget the Holocaust.

MP Hyacinth Richardson was against any development on the estate especially one that would benefit only tourists. He preferred that a state-of-art medical centre or recreational centre be built on the property.

Land tax

The motion tabled by independent MP Patrick Illidge to put the land tax on hold until legislation was tabled within 60 days to eliminate it also was approved unanimously.

There was some criticism from opposition National Alliance (NA) MPs that coalition MPs were conveniently in favour of motions that related to issues on which government still was working, such as the new tax system. This comment was in reference to the votes on Emilio Wilson Estate and Mullet Pond, which the coalition MPs said they could not support because government was working on zoning.

Plastic bags

Parliament also voted unanimously to implement a ban on single-use plastic bags. Two motions calling for this were presented by MPs Johan “Janchi” Leonard (UP) and independent MP Frans Richardson. The two later worked on merging the motions into one.

The approved motion gives government 120 days to draft an ordinance for Parliament to approve to ban the importation of the plastic bags and call on wholesalers and retailers to provide paper, reusable or biodegradable bags.

Ministers St. Maarten outline policies related to budget to MPs

TUESDAY, 20 MARCH 2012

~ Duncan aims to introduce fees for Justice services ~

PHILIPSBURG–The seven ministers have given Parliament an overview of their policies and plans for 2012 as these related to the draft 2012 budget that is before Members of Parliament (MPs) to approve.

The plenary session on the budget had a false start on Monday morning due to the lack of a quorum. That was speedily followed by the reconvening of the meeting in the afternoon by Deputy President of Parliament Leroy de Weever.

After some five hours of presentations, the meeting was adjourned until 10:00am today, Tuesday, when MPs will pose questions to the cabinet members on their policies, plans and how these fit within the budget. It is also expected that several MPs will table motions that will directly impact the budget in various ways, as the meeting progresses.

While a number of the policies outlined were repetitious based on past presentations by ministers, these somewhat fitted in with the opposition National Alliance (NA) request to have the cabinet give more substance to the budget.

Tourism, Economic Affairs, Transportation and Telecommunication Minister Franklin Meyers even asked Parliament to excuse him from making a presentation because it would be basically the same as the policy outline he gave to MPs in October 2011. De Weever said he had to continue with the presentation, as it was his “duty” to provide the information.

Meyers spoke about preparatory work to develop an investment package open to local and foreign investors as an economic booster. His ministry also is working on streamlining the business licence process and hopes to put a cap of six weeks on the process.

If no communication is received within that period, the licence will be considered as granted for straightforward businesses. For other, speciality businesses that would require the input of other departments, the processing time could be longer.

Meyers pointed out that as part of the revamping of the tax system, his ministry together with that of Finance was looking into reducing the profit tax to possibly between 15 and 18 per cent, compared to the some 34.5 per cent now levied.

He also outlined his vision to attract more high-end tourism business through branding of existing properties and encouraging the development of boutique hotels, as well as delving more into niche markets such as the honeymoon sector.

Meyers said the beach policy would be adjusted and pending Jet Ski licences for which two local youngsters had applied would be granted. He said it was not acceptable that there were moratoriums in areas where locals were involved while there was none for businesses such as jewellery stores, operated mostly by non-locals. He said it was time the people of St. Maarten were “part of the economic growth.”

Finance Minister Hiro Shigemoto outlined the process used to develop the budget and the relevant laws that play a part in the compilation. As for policies, he also rehashed his vision of revising the tax system as a means of broadening the tax base, improving government’s finance management to the level of best practices and upgrading the tax authority, among other projects.

As the last of the ministers to address Parliament, Shigemoto said it was good to have listened to his colleagues go through what was in the budget in terms of policies and plans. He added that based on the way MPs had spoken in the Central Committee of Parliament’s handing of the budget, the public might have thought that it was “a horrible document.”

Prime Minister Sarah Wescot-Williams highlighted the need to upgrade the civil service through an education plan about the way government functions that would extend to the public later. Wescot-Williams also outlined the establishment of an expanded national archive, further development of the National Gazette, and strengthening of the National Security Service, among other projects and policies.

She was critical of MPs for questioning the policies of the ministers and by extension the cabinet as a whole when the Governing Programme had been presented to Parliament since September 2011. “No one discussed the government programme,” she said.

Deputy Prime Minister/Infrastructure Minister Theo Heyliger based his presentation on the United People’ (UP) party/Democratic Party (DP)’s governing programme titled a “Foundation of Hope” and zoomed in on the need to improve the organisation of his ministry to kindle the community’s respect. He said the ministry had to contend with limited resources, human capacity and tools.

Pay for services

Justice Minister Roland Duncan pointed out again his intention to bring legislation to introduce a fee for residence permits. The ministry receives some 5,000 requests annually for renewal and new residence permits. At present, a processing fee is charged when a request for a new or renewed employment permit is logged.

Duncan also will seek to raise more money for his ministry by implementing fees for “Justice services” such as the new requests/renewals for gun permits and requests for police records and public gathering permits for events. No fee is levied for these services other than purchasing of a revenue stamp.

He also spoke about the need to acquire “The Box” in Cay Hill for use as a youth detention centre and criminal psychiatric facility, among other uses. It will also serve as the main kitchen for all the detention facilities. A proposal on “The Box” will be sent to Parliament soon for review.

He addressed the human resources shortage his ministry faces and efforts to correct this, as well as trying to access funding needed to carry out the recommendations in the Plans of Approach. He referred to the Immigration Department as “neglected” over the years and said he hopes to boost its capacity and workplace morale.

Expansion of the National Detectives unit and putting the framework in place to ensure the head has a replacement also are being looked at.

On substations and increasing police presence in the 10 districts, Duncan said he was in talks with various property owners to acquire land and spaces. He hopes to conclude talks with Port de Plaisance to use two old buildings on its property to house police officers temporarily, as construction of the substation to be built in that area is yet to be started.

Male teachers

Education, Culture, Youth and Sports Minister Rhoda Arrindell outlined the strides she had made in her portfolios, taking time to address comments made by some opposition MPs on the tweaking of the Culture Policy, efforts to host the 2013 Kingdom Games and adequate funding for youth organisations.

Arrindell spoke of the possibility of extending school hours, attracting more male teachers to the classrooms, making sports a mandatory part of the curricula and emphasising graduating students being able to converse comfortably in English, Dutch, Spanish and French.

While working on a sports policy, a Sports and Recreation Foundation and a Youth Development Foundation are in the works. An Interim Sports Technical Committee is in place. The “Get off the Block, Get on the Bus” programme will be rewritten to meet pressing goals.

Man in the mirror

Public Health, Social Development and Labour Minister Cornelius de Weever prefaced his presentation with a video clip to the sound of Michael Jackson’s “Man in the Mirror.” The clip showed scenes not in St. Maarten of emaciated children, homelessness and poverty, among other social ills. It even had a brief clip of Adolf Hilter in his trademark military uniform complete with swastika.

De Weever said the clip was “to set the mood” and evoke the question whether a better St. Maarten was desired. He said his ministry was busy with a health information system to establish a baseline, to monitor policies and any outbreak.

He urged all residents to take control of their health and see physicians regularly. He also asked MPs to support medical policies. The development of a national disability fund and pension plan are being explored.

Giving insights into other policies, De Weever said the foreign work permit policy was under review, as well as the labour laws. Those laws are seen as key to “drastically reduce” youth unemployment.

False start

Monday’s meeting was slated to start at 10:00am. However, after a 30-minute wait, only seven MPs were signed in for the start of the session, one signature short of a quorum. President of Parliament Gracita Arrindell and fellow MP Johan “Janchi” Leonard were not present, as they were travelling back from Aruba.

Although National Alliance (NA) MPs William Marlin, George Pantophlet, Louie Laveist and Hyacinth Richardson as well as independent MP Frans Richardson were present in the General Assembly Hall and in their seats, they had not signed in for the meeting.

Following a roll call, Deputy President of Parliament Leroy de Weever said the session had to be reconvened within four times 24 hours based on the Rules of Order. He immediately set the second calling of the meeting for 2:00pm. It was pushed later to 3:00pm as NA members indicated that they wanted to attend a funeral.

When the meeting was opened for the second time, there was the required number of signatures for a quorum.

The only other procedural issue to come up as the afternoon progressed was MP Laveist asking for a roll call just when Shigemoto had started with his presentation. There were about four MPs in the hall at that time. As preparations for the roll call were made, MPs in the hall gestured to their colleagues to return to their seats. Some MPs made it back to their seats just as the general secretary called their names. Ten MPs were noted as present, so the session continued.

Cft halfjaarsrapportage over Curaçao en Sint Maarten: “Uitdagingen in financieel beheer en economie”

Persbericht CFT

13 maart 2012

Willemstad – Het College financieel toezicht (Cft) signaleert in de zesde halfjaarrapportage dat Curaçao en Sint Maarten de komende jaren nog voor de nodige uitdagingen staan om de overheidsfinancien op orde te houden en het financieel beheer te verbeteren, buiten de uitdagingen die de economieën ondervinden van de internationale conjunctuur. Curaçao zal moeten laten zien dat de ambitieuze hervormingsplannen ook daadwerkelijk uitgevoerd worden, terwijl Sint Maarten  nog een flinke slag moet maken met het in kaart brengen van de effecten van de vergrijzing op de meerjarige overheidsfinanciën. Daarbij moeten beide landen, maar vooral Sint Maarten, flinke stappen zetten in het verbeteren van het financieel beheer. Dit is erg belangrijk, aangezien deugdelijk financieel beheer een noodzakelijke voorwaarde is voor zorgvuldig begrotingsbeleid.

Het Cft erkent dat bij beide landen sprake is van vooruitgang. Curaçao heeft ambitieuze plannen om de gezondheidszorg en de oudedagsvoorziening te hervormen, om zo de meerjarige houdbaarheid van de begroting te verbeteren. Met Sint Maarten is de samenwerking en communicatie de afgelopen periode flink verbeterd. Een op 17 januari 2012 geopend Cft-kantoor te Philipsburg moet deze opwaartse lijn bestendigen.

Het Cft zal in 2012 samen met Curaçao de ambitieuze tijdsplanning van de hervormingsmaatregelen nauwlettend monitoren en, ingeval de planning niet gehaald wordt, erop toezien dat adequate dekkingsmaatregelen worden genomen. In de halfjaarrapportage signaleert het Cft ook risico’s omtrent de voorgenomen bouw van een nieuw ziekenhuis. Op dit moment is het nieuwe ziekenhuis nog niet budgettair voorzien in de begroting, waardoor er geen duidelijkheid is over de financiële kaders en de mogelijke risico’s van een nieuw ziekenhuis voor de overheidsbegroting. Wat wel duidelijk is, is dat het nieuwe ziekenhuis alleen financieel gezond geëxploiteerd kan worden als de talrijke hervormingsmaatregelen in de gezondheidszorg daadwerkelijk worden gerealiseerd. Het Cft zal deze hervormingsplannen en de bouw van het nieuwe ziekenhuis dan ook in samenhang blijven bezien.

Ten aanzien van Sint Maarten heeft het Cft zijn zorgen uitgesproken over de soliditeit van de batenraming in de begroting 2012. Een belangrijke inkomstenverhogende maatregel voor 2012 is het belasten van huurinkomsten van niet-ingezetenen die onroerend goed bezitten op Sint Maarten. Het Cft juicht dergelijke initiatieven om de inkomsten te verhogen toe, maar heeft aangegeven risico’s te voorzien met betrekking tot de praktische uitvoerbaarheid van deze maatregel. Het Cft zal in 2012 een door Sint Maarten opgestelde concrete tijdsplanning benutten om de voortgang van deze maatregel te monitoren. Mocht gedurende het jaar blijken dat de verwachte inkomsten niet gerealiseerd kunnen worden, dan zal het Cft erop toezien dat adequate dekkingsmaatregelen worden genomen om de begroting sluitend te houden.

Een ander aandachtspunt dat in de halfjaarrapportage naar voren wordt gebracht, is de financiële positie van de overheidsN.V.’s en stichtingen op Curaçao en Sint Maarten. Voor beide landen heeft het Cft (een deel van) de jaarrekeningen voor 2008 en 2009 ontvangen. Op basis van deze –niet volledige- informatie trekt het Cft de conclusie dat de financiële situatie van enkele grote overheidsN.V.’s en stichtingen op Curaçao zorgwekkend is. Op Sint Maarten lijkt de situatie tot en met 2009 minder zorgelijk. Aangezien de landen impliciet als garantiesteller voor de overheidsN.V.’s en stichtingen worden gezien, is het van belang om de financiële situatie van deze entiteiten zorgvuldig in beeld te brengen. Daarom wil het Cft in 2012, samen met beide landen, op basis van de meest recente jaarrekeningen de actuele financiële situatie van de overheidsN.V.’s en stichtingen in kaart brengen. Zo ontstaat beter zicht op de risico’s voor de begroting van de landen, kan beleid ter beheersing van die risico’s ontwikkeld worden en kunnen eventueel noodzakelijke maatregelen getroffen worden.

Minister Shigemoto: Budget figures St. Maarten conservative and realistic

THURSDAY, 23 FEBRUARY 2012

PHILIPSBURG–Income and expenses in the draft 2012 budget are “estimated conservatively, but realistically,” Finance Minister Hiro Shigemoto told Parliament as he tabled the budget for debate Wednesday, almost two months into the year. The economy is showing signs of “picking up” based on increases in room occupancy and cruise passenger arrivals, he said.

The budget has to finish its rounds in the Central Committee before it is forwarded to a plenary session of Parliament for approval.

While Shigemoto did not specially outline government’s policies in his presentation, he highlighted that personnel expenses, salaries, wages, benefits and social charges needed to be controlled as soon as possible to be able to keep the budget in balance in the future.

The total operating expenses for 2012 are budgeted at NAf. 432.5 million, an increase of NAf. 11.6 million or 2.8 per cent compared to 2011. As required by law, the total operating income and expenses are balanced; the budget has no deficit, no surplus.

Capital expenditures include study loans, the cost of completion of the new Government Building, and infrastructural projects, including the ring road. The total of capital expenditures of NAf. 65.6 million will be financed by government’s available cash (NAf. 23.8 million), bonds to be issued (NAf. 37.3 million) and means available from depreciation of material fixed assets.

The pre-financed loans were refinanced during 2011 with a bond issue of 2.5 per cent. No bonds have been issued as yet to finance the capital expenditures in 2011. The actual debt position at this moment is “therefore lower than budget and the debt to GDP ratio in the range of about 23-25 per cent.”

Shigemoto attributed the late presentation of the budget to the Central Committee to a “handicap-start” because the preparation had started late in 2011. The minister pointed to “balancing issues” as the reason for the late presentation.

After a full year of operating as a country, all ministries submitted budgets that far exceeded the available means due to experiencing what is necessary to run the country, he further explained.

Growth and tax collection

The Gross Domestic Product GDP is expected to grow by 0.2 per cent annually. The minister said that to cover the increase in expenses, extra measures will be needed to be able to balance the budget. Those measures will be focused mainly on compliance.

“At this moment there is insufficient data to project growth; however, there are signs that the economy is picking up [based on occupancy rates, cruise passengers],” he said.

Delving into the “meat of the budget,” Shigemoto said the operating income for 2011 had included incidental grants while the 2012 budget includes no grants. The main increase in income concerns extra income from income taxes (NAf. 24 million). Measures to increase compliance by taxpayers are a goal of government this year.

The personnel expenses account for 41 per cent of the total operating expenses, followed by goods and services (27 per cent), subsidies and contributions (23 per cent). Operating expenses are expected to grow by two per cent annually as from 2012. A substantial part of the subsidies and contributions includes personnel expenses, Shigemoto said.

Income from wage tax and income tax as a percentage of GDP has been “declining” over the last 10 years from 10.2 per cent in 2002 to 8.3 per cent in 2009. Efforts are being made to bring back the level of wage and income taxes through actions to increase compliance, Shigemoto told Members of Parliament.

The actual income and wage taxes for 2010 and 2011 amount to NAf. 114 million and NAf. 122 million respectively.

Wage and income tax account for 32 per cent of total income, followed by turnover tax (28 per cent), profit tax (nine per cent), other taxes like gasoline excise tax, transfer tax (10 per cent) and other levies and retributions like bank licence fees, concession fees, casino and other business licence fees (21 per cent).

The increase in wage and income tax is due to actions taken by the tax authorities in the real estate sector and should lead to substantial increase in income tax. The increase in turnover tax is due to the fact that in 2011 only 11.3 months of turnover were subjected to a rate of five per cent.

The jump in wage and income tax is mainly due to extra income tax expected from non-resident property owners. Although the expected additional income includes retroactive assessments, a structural increase in wage and income taxes is expected due to actions taken to increase compliance. Government aims to collect NAf. 48 million from foreign condo owners.

Expenses

The increase in expenses of the Parliament and Councils compared to the 2011 budget is caused by an increase in “personnel occupancy” (NAf. 2.8 million) and increases in travel expenses (NAf. 0.9 million), advisory services (NAf. 1 million), courses and communication.

The increase for the Ministry of Finance compared to the 2011 budget is due to an increase in personnel expenses (NAf. 2.4 million) and in interest and depreciation expenses (NAf. 2.6 million).

The changes to Ministry of Tourism, Economic Affairs, Transport and Communication compared to the 2011 budget are due to an increase in personnel expenses of NAf. 2.2 million and a decrease of NAf. 5.7 million in USONA/SEI funded projects included in the 2011 budget.

Shigemoto said personnel expenses, excluding cost of medical care, had increased by some 15 per cent due to salary adjustments and extension of work force (5.5 per cent). Total personnel expenses, including personnel expenses for the subsidised foundations, including the cost of medical expenses of personnel, amount to about 55-60 per cent of total operating expenses.

“Any increase in personnel expenses has a serious material effect on the total budget. Personnel expenses, salaries, wages, benefits and social charges need to be controlled as soon as possible in order to be able to keep the budget in balance in the future,” he said.

Figures per ministry

The Ministry of Education, Youth, Culture and Sports accounts for the lion’s share of the budget. A total of NAf. 110.7 million is budgeted, up by NAf. 621,000 from last year.

The Ministry of Justice has a decrease in its budget. The total allotted is NAf. 67.4 million, NAf. 1.2 million less than in 2011.

The Ministry of Tourism, Economic Affairs, Transportation and Telecommunication also saw a decrease in its budget. The total budget is NAf. 30.3 million, down by NAf. 3.5 million.

A total of NAf. 15.4 million is budgeted for expenses for Parliament and the High Council of State. This is NAf. 9.5 million more than 2011.

Budgeted for the Ministry of General Affairs is NAf. 69.3 million, up by NAf. 1.8 million from last year.

The Ministry of Finance’s budget is NAf. 43.1 million, increased by NAf. 3.3 million.

The Ministry of Health, Social Development and Labour has a budget of NAf. 61.5 million – increased by NAf. 2.8 million.

The Ministry of Public Housing, Spatial Development, Environment and Infrastructure has a budget of NAf. 34.4 million, an increase of NAf. 1.8 million.

Moving forward

Shigemoto warned that any changes to the draft budget during its handling in Parliament would mean that the draft budget would have to be re-submitted to the Committee for Financial Supervision CFT for advice. The CFT already has issued a preliminary cautiously positive advice. A formal advice will be given after Parliament has approved the budget.

“If these changes are budget-neutral, the process could possibly be shorter than if changes are made without considering how to cover the changes of increases in cost in the draft budget. This in turn would mean a longer period without an approved budget 2012.”

The Finance Ministry has started the 2013 budget cycle. Each Ministry will receive a framework document soon indicating the 2013 budget room for each. The expected income level for 2013 will be calculated so the “pie” can be divided among the ministries.

Dutch minister Spies commends St. Maarten government on financial progress


TUESDAY, 14 FEBRUARY 2012

~ Says work needed for Justice ~

PHILIPSBURG–Dutch Minister of Home Affairs and Kingdom Relations Liesbeth Spies had high praise for how far the country has come with its financial administration, such as the preparation of the draft 2012 budget. However, there is still “a lot of work to do,” in particular in the area of the Justice Ministry.

Speaking at a press conference Monday evening, she commended Prime Minister Sarah Wescot-Williams and Finance Minister Hiro Shigemoto on their and the cabinet’s work in general to comply with the regulations governing the preparation of a balanced budget. Parliament will start its debate on the budget on February 22.

The Dutch Minister said she had “great appreciation” for the progress made so far in St. Maarten, in spite of its rocky start. “If I look at the improvements you’ve made during the last one and a half years, it’s really been a great job.”

Comparing the progress in the financial administration of the country with its status last year, when the budget was not approved until June, Spies said Wescot-Williams and Shigemoto “really deserve a big compliment. … It is great to see that you are working so hard to get a solid financial base for your government, because that’s in the interest of the inhabitants of St. Maarten.”

Prime Minister Sarah Wescot-Williams, who was in the joint press conference with Spies, said the meetings had gone on longer than anticipated, because Spies had to be brought up to speed, in particular on the Plans of Approach. Those plans cover the build-up of the Justice Ministry and the upgrading of the Ministry of Public Housing, Spatial Planning, Environment and Infrastructure VROMI, Legal Affairs and the Civil Registry, which fall under the Ministry of General Affairs.

The Prime Minister explained that more time was needed on the plans, because the current quarterly report charts from July to September. She said consideration had been requested for the challenges St. Maarten faced when the plans met with the reality of implementation. The possibility for adjusting the plans is there and will be looked into when the ministers meet again at the end of March.

Following the constitutional changes within the Kingdom on October 10, 2010, Spies said, all parties have their own tasks, but also need to cooperate as much as possible. Cooperation among the countries in the kingdom was one of the areas discussed with Justice Minister Roland Duncan. There is much need to improve the Justice System, Spies said, adding that a “severe discussion” on the way forward for Justice had been had with Duncan.

As for Duncan’s position that The Netherlands is not living up to all it promised to aid in the build-up of the fairly new country, Spies said it was not only what Duncan wanted. “It is also what we ask from St. Maarten, because I am convinced that we made plans of approach … and on some of these parts also the government of St. Maarten should and could improve things they are doing.”

Spies said the focus of the meetings had not been on what had gone wrong in the past, but what could be improved for the future. “It [makes] no sense looking backwards all the time. … We want to look forward and we tried to draw conclusions about improvements on the subject of Justice; for example on ICT, prison and police capacity.”

Asked whether any concrete agreements had been brokered on the way forward, Spies said more concrete agreements had been made on the plans of approach. Both the local government and Spies will pursue matters with counterparts in the scope of cooperation and whether Duncan is prepared to join in certain approaches or not.

Spies said she was using this trip to the Dutch Caribbean to become acquainted with the six islands and their ministers. “I hope that this trip will yield a basis that we can use during the next years to cooperate, because this is what it is all about in our kingdom,” she said.

She said the visit had provided an opportunity to become acquainted with the ministers of St. Maarten and the other islands and to form a better basis for cooperation. “This way it is earlier to make a phone call, send an e-mail or have a video conference. … This intensifies our personal relations, so that we can cooperate on the various subjects,” she said.

The visit and meetings with St. Maarten officials helped Spies “to get more colour” about the situation here. Her first impressions were formed only from documents and meetings with Minister Plenipotentiary Mathias Voges, “but to really talk with each other, to really discuss the problems St. Maarten is coping with gives a lot more colour to the information I already have. I think it is a visit that will pay itself out.”

Ending her statement, Spies said she was a little disappointed that so much time had been taken up by meetings, as she had been looking forward very much to seeing more of the country. She heads to Saba today, Tuesday.

Spies, who has been in her post for just two months now, met with the Council of Ministers and discussed a number of topics related to the continued building up of the country. She also met with Governor Eugene Holiday after last evening’s press conference in Dr. A.C. Wathey Legislative Hall.

Spies was appointed to her post when her predecessor Piet Hein Donner was appointed Vice-President of the Council of State.

Central Committee starts budget review St. Maarten February 22

THURSDAY, 09 FEBRUARY 2012

PHILIPSBURG–The Central Committee of Parliament will begin deliberations on the 2012 draft budget on February 22 at 10:00am. Copies of the draft budget were delivered to Members of Parliament (MPs) on Wednesday afternoon after it was received from Governor Eugene Holiday earlier in the day.

The draft budget is accompanied by supporting documents such as the positive advice on the budget from the Committee for Financial Supervision CFT.

The 2012 draft budget is NAf. 432,549,600 – some NAf. 11.6 million more than last year’s NAf. 420,916,597 budget.

President of Parliament Gracita Arrindell said Wednesday that she was happy to receive the draft budget so that Parliament finally could move swiftly with the approval process. She told the press she was even more delighted that the Finance Ministry was already working on the 2013 draft budget.
To help the process for the 2013 budget, Arrindell said her aim was to have Parliament’s budget, which is prepared independently from government, ready by May 1. Parliament’s budget forms part of the country budget.

Draft 2012 budget St. Maarten sent to governor

FRIDAY, 03 FEBRUARY 2012

PHILIPSBURG–Finance Minister Hiro Shigemoto sent the draft 2012 budget to Governor Eugene Holiday on Friday afternoon. The Governor now will have to forward the budget to Parliament for debate and approval.
The draft budget already has the pre-approval of the Committee for Financial Supervision CFT. The approval indicates that the budget meets the requirements of the Kingdom Law on Temporary Financial Supervision for Curaçao and St. Maarten. It also indicates that the budget is balanced.

CFT will issue a formal approval on the budget after it receives Parliament’s stamp of approval and providing Parliament makes no structural changes that affect the budget numbers.

The 2012 draft budget stands at NAf. 432,549,600, which is NAf. 11.6 million more than last year’s budget of NAf. 420,916,597. The figures of the 2011 budget are being used by government until the 2012 budget is approved by Parliament and CFT and signed into law by the Governor and the Finance Minister.

St. Maarten 2012 draft budget still with Advisory Council

SATURDAY, 28 JANUARY 2012

PHILIPSBURG–The draft 2012 country budget is still in the hands of the Advisory Council. Finance Minister Hiro Shigemoto is awaiting the completion of the council’s review to send the budget on to Parliament.
The budget has had approval of the Committee for Financial Supervision CFT since January 13; this approval confirms that the draft meets with the requirement of the Kingdom Law on Temporary Financial Supervision for Curaçao and St. Maarten.

The CFT will render a formal (positive) advice on the budget after it is handled and approved by Parliament. The only way the positive advice will change is if Parliament makes changes to the budget that would affect its zero balance.

The Advisory Council has had the budget since early November. “We are waiting for the Advisory Council to give its advice, so we can send the budget on to Parliament,” Shigemoto told The Daily Herald.
He hopes the budget is returned to government as soon as possible to allow its handling to start in Parliament at the latest mid-February.

CFT sees ability to meet pensions, social service as St. Maarten government ‘challenge’

WEDNESDAY, 18 JANUARY 2012

PHILIPSBURG–One of the economic challenges the Committee for Financial Supervision CFT foresees, based on global trends, is “the ability of the government to provide the social services and pension the population expects,” CFT Chairman Age Bakker told Parliament in an introductory meeting Tuesday.

Bakker, who was in the country for the opening of a CFT office and to sign a memorandum of understanding (MOU) with government on further cooperation, met Parliament with other members of the CFT board and secretariat staff.

He explained that the challenge for government stemmed from the worldwide developments on this front where governments were looking at the pension funds and social services to see if there were adequate reserves.
To this end, CFT has asked the United People’s (UP) party/Democratic Party (DP) coalition to look at the prospects for those two issues and make sure “all available data” on these services are available to government and Parliament to make informed decisions on the service that can be provided in the medium term.

Speaking of the draft 2012 budget, the new CFT chairman said government was still discussing it with CFT. When it is finally presented to Parliament it will come with a positive informal advice from CFT on its meeting all set norms. He sees this process of discussions prior to the budget’s presentation in Parliament as “a positive step from the situations in the past.”

Budgets were presented in the past and passed by Parliament only to be rejected by CFT. Those rejections arose because CFT judged the budgets as not in line with the Kingdom Law on Temporary Financial Supervision for Curaçao and St. Maarten, the law that gave birth to CFT.

“The budget will be presented very soon,” Bakker told Members of Parliament (MPs). “It is a big improvement compared to last year. We are making progress, but we are not there completely, because the law says the budget should be ready before December 15.” The deadline was not met because the 2011 budget process was lengthy.

The improvement to which he referred relates to government and CFT being at odds in the budget process in 2010 and 2011. That led to the 2011 budget receiving final approval from CFT in August 2011 after Parliament had passed a revised budget in June. “We have good hope that the 2013 budget will be within the framework.”

The 2012 budget is presented in “challenging times” for St. Maarten and the world. Bakker said it would be “a challenging task” for Parliament and government to fulfil the requirements of the law. He indicated that there might be a need during the course of the year to assess the situation again to decide whether to adjust the budget.

Dealing with the Annual Report for 2011, Bakker said this would take time, seeing that the process to adopt the budget had only ended in August. “We have heard that it will be probably before the expected date of August.”

The 2010 Annual Report is in the final process and will be sent to the General Audit Chamber and Parliament soon. These reports are “important in Parliament being able to play its role.” Without the reports, government, Parliament and CFT have to operate “a little in the dark” to a certain extent, because not all information is available. However, Bakker is optimistic about progress being made.

CFT has a role in seeing that corporate governance is implemented and fostered by government, he said. The progress of this has been discussed with the Council of Ministers and progress is being made. MPs George Pantophlet, Frans Richardson, Patrick Illidge and William Marlin made comments and asked Bakker questions about the role of CFT and its relationship with government, and on the budget.

Minister of Finance Shigemoto aims to present St. Maarten budget by end of January

~ Parliament and Advisory Council informed ~

WEDNESDAY, 14 DECEMBER 2011

PHILIPSBURG–The Ministry of Finance is working with the Committee for Financial Supervision CFT to finalize the 2012 national budget, Finance Minister Hiro Shigemoto said in a release Tuesday night. The new timeline to present the budget to Parliament is “the latter part of January 2012″ to be finalized, at the latest, on March 1.

In the interim, the 2011 budget will be used until the 2012 one has been passed by Parliament and signed into law by Governor Eugene Holiday and Shigemoto. The 2012 budget presented to CFT is NAf.432,549,600, while the 2011 budget was NAf.420,916,597.

“The Ministry of Finance is working diligently to ensure that the systems and processes are in place and lessons learnt in the previous budgets are reflected in the 2013 national budget which I intend to start working on as early as February 2012,” Shigemoto said.

The Ministry of Finance is working closely with the CFT on “a few technical adjustments.” This process should be rounded off in January and lead “to a positive advice from the CFT.”

The minister explained that Parliament, the Governor, Advisory Council, and the General Audit Chamber have been informed that the budget will not be submitted to Parliament by the December 15 deadline due to the ongoing process with the CFT.

“Every effort” is being made by the government and the Finance Ministry to have all processes and systems in place to completely comply with the Law on Temporary Finance Supervision for Curaçao and St. Maarten. The country cannot have a deficit in its budget based on the supervision law.

In the past year, the Finance Ministry and CFT have worked closely to present a balanced budget taking into consideration the challenges that came with the transition from Island Territory in the Netherlands Antilles to country within the Dutch Kingdom.