Geen inmenging minister Duncan in zaak schoonzoon oud-minister Shigemoto op St. Maarten

WOENSDAG, 02 JANUARI 2013

PHILIPSBURG — Minister Roland Duncan zal zich niet bemoeien in de strafzaak tegen zijn schoonzoon, oud-minister van Financiën Hiro Shigemoto. In antwoord op geruchten die de ronde doen over zijn mogelijke inmenging in deze zaak, wijst Duncan erop dat volgens het rechtssysteem van Koninkrijkslanden de minister zich niet mengt in individuele zaken.

Duncan heeft van het Parket van de Procureur-Generaal en het gehele rechtsapparaat geëist dat zij goed gebruikmaken van de gelden die begroot zijn voor hun diensten. Hoewel hij zich niet zal bemoeien met de dagelijkse individuele gevallen, zal men aan het einde van de dag rekenschap moeten afleggen voor deze gelden.

Shigemoto werd medio december gearresteerd onder verdenking van fraude, het witwassen van gelden en verduistering. Hij bleef enkele dagen opgesloten en werd op kerstavond vrijgelaten onder voorwaarde dat hij zich beschikbaar hield voor verhoor door de autoriteiten. Hij zou dubbele betaling hebben verricht aan bedrijven die diensten hebben verleend aan de overheid.

Duncan verklaarde dat als hij ‘de stekker uit het stopcontact trok’ om Shigemoto te helpen de situatie voor korte tijd gered zou zijn door een langdurig juridisch proces. De integriteit en het karakter van een persoon zouden voor altijd besmeurd blijven omdat men zou zeggen dat hij schuldig was maar gered werd.

“De reputatie van het land zou ook worden aangetast indien de minister van Justitie een einde zou maken aan het onderzoek van een zaak waarin zijn schoonzoon is betrokken. Men zou dan kunnen spreken van nepotisme op St. Maarten. Het land zou een bananenrepubliek worden omdat de minister van Justitie heeft ingegrepen om iemand te redden”, aldus Duncan.

Taxand report cites poor documentation by St. Maarten government

THURSDAY, 20 DECEMBER 2012

PHILIPSBURG–The internal procedure applied by government for projects and programmes it carries out “will have to be documented more.”

This is one of the “general remarks” Finance Minister Roland Tuitt made about the “draft report” compiled by Government’s Accountants Bureau SOAB on the procedures used by former finance minister Hiro Shigemoto in handling the Taxand-led tax reform project.

Tuitt told the press on Wednesday that the report had not been handled yet by the Council of Ministers, but would be dealt with “early next year,” as the Council would not be meeting again for this year.

A “peculiar item” in the report is that Governor Eugene Holiday “did not give his cooperation” to describe one of the procedures that leads to the issuance of a national decree, Tuitt said.

He also said the report showed that the procedures that needed to be followed before government made payments “were not followed” in the Taxand case.

Ex-minister Shigemoto will be led before judge on St. Maarten Thursday

WEDNESDAY, 19 DECEMBER 2012

PHILIPSBURG–Former United People’s (UP) party finance minister Hiro Shigemoto will be led before the Judge of Instruction on Thursday, December 20, Chief Prosecutor Hans Mos said Tuesday.

Shigemoto was arrested at his home on Monday morning, December 17, on suspicion of fraud, money-laundering and embezzlement in connection to the ongoing Piranha investigation. He is suspected of making double payments to a company that provided services to government.

Mos said Shigemoto’s arrest was solely in regard to the Piranha investigation and not also the Taxand investigation as has been speculated.

Shigemoto is being represented by Janna Westra, who declined comment, as Shigemoto’s legal representation received the case file only recently and cannot disclose any information.

Windward Islands Airways International’s Winair’s Chief Financial Officer (CFO) Robert Gibbs was arrested on Monday, December 3, also in connection with the Piranha investigation. Gibbs was involved in recruiting personnel for various government agencies and is suspected of committing fraud, forgery and money-laundering with regard to payment for his services from 2009 until 2011.

This investigation began after a complaint was filed in 2011.

Ex-minister Hiro Shigemoto van St. Maarten gearresteerd in fraudezaak

MAANDAG, 17 DECEMBER 2012

PHILIPSBURG — De voormalige minister van Financiën van St. Maarten Hiro Shigemoto is vanochtend gearresteerd. Dat bevestigt hoofdofficier van justitie Hans Mos tegenover de pers op St. Maarten.

De aanhouding van Shigemoto vindt plaats in kader van het Piranha-onderzoek. Op 3 december vond de eerste aanhouding in deze zaak plaats. Toen werd de 59-jarige Robert Gibbs, ceo van de luchtvaartmaatschappij Winair, aangehouden.

Gibbs was belast met het aantrekken van personeel voor de overheid gedurende de periode van 2009 tot 2011. Hij was toen een van de diensthoofden van het Departement van Financiën.

Hij wordt verdacht van fraude, vervalsing en witwaspraktijken voor het wegsluizen van gelden ontvangen voor zijn diensten, zoals officieel in een persbericht van Mos bekend werd gemaakt.

“Er schijnt een aanzienlijk bedrag in het spel te zijn”, stelde Mos in zijn persbericht van 5 december. De autoriteiten hebben onderzoek verricht in het kantoor van Gibbs op St. Maarten en twee kantoren op Curaçao.

Gibbs is vorige week donderdag op vrije voeten gesteld, maar het onderzoek in de zaak duurt voort. Mos zegt dat het onderzoek gestart is op basis van informatie dat een ex-medewerker van het departement van Financiën aan het Openbaar Ministerie heeft gepresenteerd.

Shigemoto had in 2011 Bastiaan Roorda ontslagen omdat hij informatie naar buiten bracht over vermeende frauduleuze praktijken binnen de Sintmaartense overheid.

Government Accountants Bureau SOAB’s draft report on Taxand submitted on St. Maarten

THURSDAY, 01 NOVEMBER 2012

PHILIPSBURG – Finance minister Roland Tuitt has received the first draft report from the Government Accountants Bureau SOAB on the process used by the fomer minister Hiro Shigemoto to hire and pay United Kingdom based Taxand.

Taxand review in ‘final stages’ on St. Maarten

FRIDAY, 28 SEPTEMBER 2012

PHILIPSBURG–Government Accountants Bureau (SOAB) is wrapping up the judicial review of the process used by former Finance Minister Hiro Shigemoto, to hire and pay United Kingdom-based Taxand.

Finance Minister Roland Tuitt said during Wednesday’s Council of Ministers’ Press Conference that the review is in the “final stages.” The review is costing government some NAf. 50,000.

More than NAf. 3 million in outstanding payments to Taxand by government are still on hold.
The hold was placed over two months ago in an attempt to get an outline of the Taxand tax compliance project that was initiated by Shigemoto.

No contract for the project, which includes the building of a new tax structure for the country, has been signed, although some payments have been made to the company.

Taxand has been a point of heated debate in Parliament since the fall of the United People’s (UP) party/Democratic Party/Illidge coalition in early May. The outcry has centered on the US $11 million price tag for the tax reform project and alleged family ties between the company and the former minister’s cabinet.

Review of Taxand to cost 58,000 guilders on St. Maarten

THURSDAY, 19 JULY 2012

PHILIPSBURG – A judicial review by Government Accountants Bureau SOAB of the process used by the former Financed Minister Hiro Shigemoto in hiring and paying the UK-based Taxand will cost NAf. 58,0000.

Minister Tuitt writes Taxand on assessing project on St. Maarten

THURSDAY, 28 JUNE 2012

PHILIPSBURG–Finance Minister Roland Tuitt will forward a letter to United Kingdom-based Taxand this week about the procedure government is following assess the tax reform project and the company’s inquiries about pending payments.
Tuitt told the press he expected to receive from the Government Accountants Bureau SOAB on Wednesday the estimate for a judicial review of the process used by former finance minister Hiro Shigemoto in hiring and paying Taxand.

Taxand has written to government requesting clarity about its more-than-NAf. 3 million in outstanding payments that has been put on hold by Tuitt. Government’s legal counsel is looking into the payment request.

The payments were put on hold as Tuitt attempted to obtain an outline of the Taxand tax compliance project initiated by Shigemoto. No contract has been signed for the project, which includes the building of a new tax structure for the country, although some payments have been made to the company.

Minister Tuitt supplies St. Maarten parliament with more info about Taxand

TUESDAY, 12 JUNE 2012

PHILIPSBURG–Finance Minister Roland Tuitt was back in the Central Committee of Parliament to answer a barrage of questions from Members of Parliament (MPs) about the tax reform project that was led by United Kingdom-based Taxand Group and its links to local consultants working for the Finance Ministry.

Tuitt reiterated a number of points he had raised when the meeting started a week ago about the background of Taxand, a company selected by former Finance Minister Hiro Shigemoto to carry out the tax project.

The contract between Taxand and government was never signed, but payments totalling NAf. 4.7 million for work carried out had been paid to the company under the former government. Tuitt has put the payment of invoices totalling NAf. 5.5 million on hold pending an investigation into the procedure used to select the firm.

MPs were still enraged about the price tag of the project – some US $11 million. Several pointed out that the money could have been spent better on community projects for the youth and to repair roads.

Tuitt supplied Parliament with the draft tax structure put together by Taxand with a request not to share or publish the information. He said Shigemoto had “caused damage already” because he had made part of the plan public. “It’s like going to war and giving the people who you are going to war with your strategy.”

As for the tax compliance project being carried out by Taxand via its subsidiaries, Tuitt said the 15 per cent incentive fee on collections would have had to be paid in the US dollar equivalent to the UK pound sterling. The currency risk, based on the unsigned contract, would have rested with government.

Speaking about the 2012 budget, Tuitt said he was busy with budget amendments that would cover the payment of the cost of living adjustment (COLA) to civil servants and others. He hopes to bring these to Parliament before the end of June, as the three-week period granted by the Committee for Financial Supervision CFT ends on Wednesday. He is looking at paying the COLA in July, while vacation allowance and other adjustments will be paid this month to prevent civil servants being hit with hefty tax deductions from their salaries.

Tuitt said he also would review the levying of income tax on non-residents who rent their condos. This budget item was expected to bring in some NAf. 21 million, but estimates now show that the most that can be collected is about NAf. 600,000. Also to be reviewed is whether reaching back five years to collect this tax is feasible. The minister has meetings with people in the real estate field and has learnt that this attempt to collect taxes is “having a devastating negative effect on the industry.”

Several other pending projects from the former government also have been put on hold, including the American football cheer-leading programme with a price tag of US $310,000 and hosting of the wedding of two US celebrities with a reality show spin-off (US $95,000).

Based on the pending annual accounts it appears as though 2009 had a deficit, while 2010 and 2011 are showing surpluses. Tuitt will answer in writing a number of other questions posed by MPs on the Taxand project and the budget in the coming days.

Taxand reform project sparks animated debate in St. Maarten

TUESDAY 5 JUNE 2012,

~ Tuitt discusses concerns, irregularities ~

PHILIPSBURG–Several Members of Parliament (MPs) say they will call for a parliamentary inquiry if they are not satisfied with answers about United Kingdom Taxand’s role in the drafting of a new tax structure for St. Maarten.

The firm was involved in executing work for the government under former finance minister Hiro Shigemoto and when the issue was discussed in a meeting of the Central Committee of Parliament Monday, it generated animated contributions from several MPs.

MPs supporting the National Alliance (NA)-led coalition had requested the meeting to address a letter from the Committee for Financial Supervision CFT about the perceived deficit in the budget. The Taxand issue was part of the discussion, as it was not specifically catered for in the budget. The meeting on this subject resumes on Monday at 10:00am.

In addressing the MPs concerns about the project, Finance Minister Roland Tuitt said his research since taking office on May 21 had found that the proper rules and regulations had not been followed. He also disclosed that legal advice on not paying Taxand the second instalment for work carried out was being sought.

Finance Minister Roland Tuitt (centre) talks with President of Parliament Gracita Arrindell.
Also in photo is Tuitt’s advisor former finance commissioner Xavier Blackman.

Some NAf. 4.7 million already has been paid to Taxand, with another NAf. 5.5 million pending.

The contract to employ Taxand was never completed. It had only the signatures of the Taxand representatives. The draft agreement sought to give Taxand some 15 per cent of the funds collected from increased tax compliance, according to Tuitt.

The Government Accountants Bureau SOAB has been asked to give government an offer to carry out a review or an audit of the whole Taxand proceedings. Once the price is acceptable, SOAB will come up with terms of reference by which to gauge what Taxand has done.

The Taxand project, which is currently on hold, was estimated to cost US $11 to $14 million, excluding “out of pocket” expenses for Taxand personnel such as car, hotel, food and airline tickets totalling some US $290,000 every two weeks.

Tuitt pointed out that the rules that required government to go to an open tender for projects costing more than NAf. 50,000 or an investment project of more than NAf. 150,000 had not been followed. Also, no national decree signed by the governor to allow deviation from the norm was found.

As for the budget deficit, Tuitt said the good news was that revenue projections showed that “if things continue the way they are right now” the total income for 2012 would be NAf. 441 million, instead of budgeted NAf. 431 million. The increase, mostly due to Turnover Tax (ToT), will be sufficient to cover the NAf. 17 million payment of the cost-of-living adjustment (COLA), the periodic salary increase for civil servants and the NAf. 21 million hole left from the non-collection of back rent tax from non-resident condo owners.

Tuitt called Shigemoto’s announcement shortly before leaving office that the COLA would be paid in June “premature,” because the needed budget amendment had not yet been passed.

Democratic Party (DP) MP Leroy de Weever called for an explanation of the shortfall in the budget. He had been vocal during the budget debate about the collection of back taxes from condo owners not being feasible. He also was very incensed about a typographical error in this newspaper on May 25 about his questioning a NAf. 73 million hole in the budget, when it was actually NAf. 37 million, contending that it had not been a typographical error, but had been done deliberately.

Independent MP Frans Richardson questioned what would happen if the COLA was not paid and what factors had led to the realisation that the NAf. 21 million was not collectable. He also asked about family connections of government personnel to Taxand.

MP Roy Marlin (DP) wanted to know whether the windfall in ToT was sustainable and whether there had been consultations with civil servants on the Taxand project. He said there was a serious problem when work for more than $10 million was to be executed without an open bidding process.

Independent MP Patrick Illidge said he found it amazing that money had been found for the tax reform project with Taxand, but Shigemoto could have found none for the Middle Region Community Council. He asked for an explanation of the procedures for taking money from the reserves.

MP Louie Laveist (NA) said the Taxand project “smells to high heaven” and the balanced budget presented by Shigemoto was a myth. He said NA had warned against a “balanced budget that could be achieved only by “abracadabra.” He added that Parliament had no clue about what was coming in projects or how the former government intended to pay for projects.

MP Dr. Lloyd Richardson (NA) said the Taxand issue came down to whether procedures had been followed.

MP George Pantophlet (NA) queried about the functioning of the Finance Ministry’s internal control department.

United People’s (UP) party MP Johan Leonard questioned whether Tuitt had received a complete transition document from Shigemoto. He asked for a detailed outline of what ministries had under-spent in the past months and whether Shigemoto had addressed the CFT’s concerns.

Independent MP Romain Laville called for an overall financial audit for all ministries from April 1 to May 31, the final two months of the UP/DP/Illidge coalition. He said when discussions had been held in the former coalition about the budget, Taxand never had been mentioned. He said if the results of the audit showed discrepancies, “if heads have to roll, so be it.”

MP Hyacinth Richardson (NA) said he remembered the Taxand project being mentioned in the budget debate, but no amount had been tagged to it.

MP Jules James (UP) said he knew Shigemoto to be a person who followed the rules and was not a “runaway or renegade” as he was being made out to be. He asked for the Taxand Agreement to be read out, what plans were in place to take care of the COLA payment and whether CFT was content with the last explanations given by Shigemoto. He also enquired about plans for the slow season and about the May financial outlook.

Shigemoto broke all the rules in the book with Taxand deal St. Maarten

Finance Minister Roland Tuitt and MP Patrick Illidge speak ahead of the start of Monday’s Central Committee meeting. (Leo Brown photo)
Minister Tuitt: no tender, no signed contract

St. Maarten – Former Finance Minister Hiro Shigemoto broke all the rules in the book when he entered into a deal with tax consultancy Taxand for a contract worth between $11 and $14 million that included a clause that would entitle Taxand to 15 percent of the additional revenue its handiwork would generate for the Government of St. Maarten. This sums up the findings the new Finance Minister Roland Tuitt presented in a brief overview in the Central Committee yesterday evening.
“You cannot circumvent the rules, even if you have the okay from the Council of Ministers,” Tuitt said.

In his first appearance in a central committee meeting, the minister surprised MPs with a concise overview of his findings about the Taxand case during his first week in office.
“The normal procedures were not followed,” Tuitt concluded.
“When you are going into a large project like this you need to have terms of reference; they establish the requirements the contract party will have to meet.”
But the Finance Ministry did not formulate these terms of reference for the project to modernize St. Maarten’s tax system. The audit ordinance stipulates that projects worth more than 50, 000 guilders require a public tender, but this was not done either. Tuitt said that there was also no tender by invitation.
“For such a procedure you invite parties to submit a bid, but that must be done based on the terms of reference and they did not exist.”
Also, the Finance Minister added, the expenditures for the project were not budgeted. Above the $11 to $14 million contract price, Taxand expected to be compensated for out of pocket expenses like air fare, car rental and hotel costs. The Finance Ministry paid $290, 000 to the company every two weeks.
“Was a contract signed for this project? No,” Tuitt said.
“Taxand signed the contract but the former Finance Minister did not sign it. He gave Taxand the opportunity to work on an incentive basis. They would get 15 percent of the extra income their measures would generate. That is already a problem because how are you going to measure that?”

Lastly, Minister Tuitt said, the Finance Ministry needed a national decree signed by the governor to justify the payments that were made to Taxand.
“Was there such a decree? No,” Tuitt said.
All in all the finance ministry paid 4.7 million guilders to Taxand before the project was halted. A second payment of 5.4 million guilders was stopped by the new government.
Tuitt said that he has asked the government accountant bureau (Soab) for a bid to investigate the Taxand case. One of the questions such an investigation must answer is whether the payments the Finance Ministry made to Taxand were justified based on the product the company delivered. The ministry also asked legal advice about the consequences for stopping the proceedings with Taxand.

MPs question Taxand contract and perceived budget deficit

St. Maarten – Members of Parliament confronted Finance Minister Roland Tuitt during his inaugural appearance in a Central Committee meeting yesterday evening pertinent and pregnant questions about the 2012 budget deficit and about the contract the Finance Ministry signed with Taxand for the restructuring of the tax system and with Judith Brewster’s B&B consultancy.

Democratic Party MP Leroy de Weever launched a vigorous attack on the Daily Herald for what seems to be a simple typo in a story about the budget deficit, but what the MP perceived as a deliberate attempt to misquote him. While De Weever had noticed, based on letters from the financial supervisor Cft that the deficit could be an estimated 37 million guilders; the contested story mentioned 73 million.
Independent MP Frans Richardson asked pointed questions about the 21 million guilders on condominium tax the government will not collect this year and about the 17 million guilders for cost of living adjustment payments to civil servants. “Has the minister been able to ascertain which steps are taken to collect the 21 million in taxes? And what measures have been taken to cover the payment of the 17 million?”
Richardson also wanted to know whether the cost of living adjustment payment promise is based on a ministerial decision and whether the government is able to cover this payment.
Furthermore Richardson demanded an overview of payments to Taxand and he asked whether there are family relationships between Taxand and employees at the finance ministry. “Did former Finance Minister Shigemoto follow proper procedures? When and why was the Taxand contract put on hold and what have the concrete results of Taxand been so far?”

DP-MP Roy Marlin said that the Cft “may give St. Maarten an instruction if we continue this way.” He asked whether the announced higher turnover tax revenue is structural or incidental. He also questioned the decision to finance the cost of living adjustment payments from the reserves. “You cannot do that if the annual accounts are not approved. When will these accounts be completed and presented to parliament?”
Marlin also expressed his concerns about the process that led to the Taxand contract. “The minister should have motivated the deviation from the public bidding process. Who took that decision? The Council of Ministers or the Minister of Finance?”
Marlin also wanted to know whether Taxand has legal recourse in case the contract is halted definitely.

Other MPs had similar questions. Independent Patrick Illidge went as far as doubting the integrity of the previous administration by asking for a complete overview of payments during the past five weeks.
NA-MP Louie Laveist said that, if the minister’s answers to the questions were not satisfactory he would push for a parliamentary inquiry. Laveist also wanted more information about Taxand. “Who are these people?” he asked. “The rules of accountability and best practices have been violated.”
Laveist added that he does not hold Tuitt responsible for “the muck the previous government left behind, but that he expects clear answers.

Independent MP Laville asked for an “overall financial audit” of all ministries for the period of April 1 until May 31. He remarked that the increase in the turnover tax was for a set period of time until the new tax structure is in place. He also noted that under the outgoing government documents have been signed at record speed in four to five days.
Laville said that if there has been any wrongdoing, those responsible ought to be held accountable.

UP-MP Jules James defended the former finance Minister Shigemoto, saying that he is someone who would do things according to the rules. “He is not some kind of runaway renegade,” he said.
“If someone is guilty, then all ministers are guilty, also those who are now members of the current government.”
James said that the Taxand contract came about after several deliberations in the council of Ministers. “It was not the personal piggy bank of the former minister of finance.”

Tuitt stops ‘Taxand’ fiscal reform project in St. Maarten

THURSDAY 31 MAY 2012, PHILIPSBURG–Finance Minister Roland Tuitt announced Wednesday that the tax reform project being carried out by United Kingdom-based Taxand Group has been stopped.

Concerns had been raised about the cost of the project, some US $11 million by independent Member of Parliament (MP) Frans Richardson earlier this month.

Tuitt said the tax compliance segment of the project that was “authorised” by former Finance Minister Hiro Shigemoto has to be reviewed to determine how to proceed, as two people have already been hired. The minister will meet the Tax Department this week to look at the Taxand issue and others.

In his last press conference before leaving office, Shigemoto had said that Taxand had devised a financial analysis (so-called straw man) with budgetary effects on the proposed fiscal measures, but it has not been approved by the Council of Ministers as yet.

The Department of Fiscal affairs has to draft an advice on the “straw-man” before it can be approved by the Council of Ministers.

An advice on the total Taxand Project was approved by the Council of Ministers on March 22. This advice, together with a national decree were thereafter sent to the Governor’s Office for a signature to allow further execution, Shigemoto said.

“New Tax Administration St Maarten Project” is made up of several components to eliminate backlog, purchase resources such as vehicles, recruitment, ICT infrastructure and equipment, education and training, control and communication.

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.”

 

New tax system St. Maarten not yet approved by Council of Ministers

Taxand group financial analysis not yet approved by government

FRIDAY, 18 MAY 2012

PHILIPSBURG–United Kingdom-based Taxand Group has devised a financial analysis (so-called straw-man) with budgetary effects on the proposed fiscal measures, but it has not been approved by the Council of Ministers as yet, outgoing Finance Minister Hiro Shigemoto told the press on Wednesday.

The Department of Fiscal affairs has to draft an advice on the “straw-man” before it can be approved by the Council of Ministers.

An advice on the total Taxand Project was approved by the Council of Ministers on March 22. This advice, together with a national decree, were thereafter sent to the Governor’s Office for a signature to allow further execution, Shigemoto said.

He described his disclosure about Taxand’s involvement in the country’s tax reform process “another rumour busted” because it was called into question by independent Member of Parliament (MP) Frans Richardson. Richardson had claimed that Shigemoto had signed off on a multi-million dollar project with “a Canadian firm.”

Shigemoto said a second international company was considered for the tax reform project. Its price tag was some 30 million euros and entailed residents’ tax information being routed through The Netherlands, which was not acceptable. Taxand’s project should cost some NAf. 11 million.

New Tax Administration St Maarten Project is made up of several components to eliminate backlog, purchase resources such as vehicles, recruitment, ICT infrastructure and equipment, education and training, control and communication.

The tax projects still require priority and follow-up. Shigemoto said he has left behind complete documentation of each phase of the project for continuation.

The “work in progress” new tax system is aimed to reduce all current direct tax rates, increase the country’s competitiveness to encourage investment by reducing tax rates and through simplification and refocus the economic incidence of taxation on visitors/migrant workers rather than on the local population in a way which will not damage the tourism industry or the wider economy.

Shigemoto further explained that it is designed to increase tax collection by collecting more at source, while simplifying the system and improving compliance. The reform project was scheduled to be in place by January 2013.

Tax suggestions

Currently, residents are taxed on worldwide income. It is proposed to tax residents on income derived in St. Maarten only, the finance minister explained.

Income tax is currently “progressive and has an effective rate up to 43.75 per cent. It is proposed to have no taxes on the first NAf. 36,000 of earnings, a five per cent tax on earnings of NAf. 36,000 to NAf. 54,000, a 10 per cent tax on earnings of NAf. 54,000 to NAf. 72,000 and a 15 per cent tax thereafter.

Corporate tax is currently taxed at 30 per cent, plus 15 per cent surtax, making an effective rate of 34.5 per cent. The proposal is to keep a flat 15 per cent on all profits coupled with a potential election between tax on profits and a lower tax on turnover for a fixed/minimum number of years.

A one per cent fee is levied on all money transfers out of St. Maarten for all residents and non-residents. It is proposed not to tax St. Maarten residents and businesses with a tax registration or CRIB number. Non residents are to pay a higher fee than one per cent.

Capital gains, taxed at 30 per cent, are to be abolished.

It is suggested to lower bank interest, now taxed at 25 per cent plus 20 per cent island surcharge, to 10 per cent. Tax-free accounts are to be available to St. Maarten residents with a CRIB number, allowing savings up to a certain limit.

Dividends are proposed to become tax free for St. Maarten residents or businesses with a CRIB number, whereas non residents will pay 15 per cent.

It is proposed to maintain the five per cent Turnover Tax (ToT) as a preferred option, given the lower compliance burden for residents and businesses, Shigemoto said.

VAT/Sales taxes were considered but they would have to be levied considerably at higher rates (between 10 per cent and 22 per cent) to deliver the same income stream as the current five per cent TOT.

At present, property rentals are taxed as income, timeshare units are taxed per week and hotels are taxed under room tax. It is proposed to tax property rental income at 10 per cent, timeshare units per night and hotels taxed under TOT with potential additional surcharges.

Casinos are not part of the tax system. The proposal is to implement a simple tax based on the number of machines and tables on site.

Similarly, tobacco and alcohol are not taxed. An enhanced TOT on tobacco and alcohol sold is suggested.

Tax revenues

Tax revenue is estimated at NAf. 378 million, excluding compliance and operational improvements, according to Shigemoto.

Based on complete tax proposals, tax collection is estimated to generate an additional NAf. 149.4 million, if implemented in 2013 for the whole of that year, totalling NAf. 527.4 million annually, excluding said compliance and operational improvements.

The three scenarios show tax increases from NAf. 18 to 45 million on an annual basis, taking into consideration tax compliance and operation improvements, he continued. The total tax revenue, coupled with compliance and operational improvements, can generate as much as NAf. 45 million, to the tune of NAf. 572.4 million annually.

The tax compliance team has identified 492 individuals/corporations as possible previously unidentified taxpayers. Data from various open sources were used for the Yellow Pages, vehicle registry and Chamber of Commerce registry to confirm or falsify findings.

Questions about new tax system St. Maarten

16/05/12

PHILIPSBURG-Independent Member of Parliament (MP) Frans Richardson decried on Tuesday reports that the current caretaker government has signed off on a contract “to the tune of 13 to 14 million guilders” for a Canadian company to provide the country with a new tax system and has opted to use funds from the national reserve to finance the project.

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 Minister Shigemoto: Government hopes to pay cost of living adjustment by June 30

FRIDAY, 04 MAY 2012

PHILIPSBURG–Government should be able to pay the cost of living adjustment (COLA) for 2010 by June 30, Finance Minister Hiro Shigemoto announced Thursday night.

Shigemoto, who is currently serving as the caretaker Minister of Finance, said the payout should be “to the tune of NAf.17 million – inclusive of back service pension premiums.”

The payment should have been made to government workers since January, but due to difficulties in putting together the 2012 budget this was not done.

Windward Islands Teachers Union (WITU) President Claire Elshot had said at a press conference earlier Thursday that the union hoped the COLA would be paid at the end of June together with the vacation pay. She had raised concerns that if the vacation pay was paid before the COLA and not together there would be need for recalculations.

In his press release last night, Shigemoto explained that his Cabinet “has been working diligently to secure the necessary funding” to meet government’s obligations towards civil servants of Country Sint Maarten.

“The funding will come from the 2010 balance sheet prior to 10-10-10 and 2011 extended book year financial statement for which provisions have been made to the tune of NAf. 11 million and NAf. 2 million respectively, and the remainder, approximately NAf. 4 million, will be covered from the cash reserves,” Shigemoto explained.

He cautioned that the arrangement would have to be approved by the Committee for Financial Supervision CFT and that discussions with the CFT would commence on a technical level.

The press release continued: “The Financial Statement 2010 prior to 10-10-10 is still being checked by the SOAB Accounting Bureau, and the 2011 Financial Statement is being finalised to be checked by the SOAB and subsequently to be forwarded to Parliament in August 2012.”

He also stressed that a long-term solution had to be worked out with all stakeholders, as the current arrangement will not be sustainable in the coming years.

Meanwhile, the WITU board still has to be informed officially of government’s plan to pay the COLA.

The union’s board met Thursday evening to finalise an agenda for a May 12 general membership meeting. The COLA payment and tackling absenteeism are expected to feature prominently on the agenda.

St. Maarten ministers updated on tax reform progress

SATURDAY, 21 APRIL 2012

PHILIPSBURG–The Council of Ministers was updated recently about the next phase in the tax reform, for which proposals are in the finalisation phase. Several meetings have been held with stakeholders and will continue in the coming weeks, a government press release announced.

The second phase (tax reform) and third (implementation) have been approved and the Work Group New Tax System was dissolved. Two project leaders were appointed to coordinate a smooth transition and implementation of the tax reform, tentatively set for January 1, 2013.

There will be a full information campaign to inform the community before the new tax system is implemented.

Finance Minister Hiro Shigemoto is pleased with the interest in the tax reform project shown by all stakeholders. “We are well on our way in revamping our national tax system and I am looking forward to when the process has been finalised and we have a new system in place.”

“The Ministry of Finance is steering the process to revamp the country’s tax system, making it easy to understand, easy to collect and leading to economic efficiency, fairness, transparency, and a stable and predictable system to fund public expenditures and create further economic growth, therefore contributing to employment opportunities for the population,” the press release stated.

St. Maarten Hospitality and Trade Association (SHTA), Tax Foundation, the Chamber of Commerce and Industry, Social Insurance Bank SZV, the Committee for Financial Supervision CFT, the Central Bank of Curaçao and St. Maarten (CBCS) and the Department of Economic Affairs have been consulted on the tax reform.

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.

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.

MPs get answers on expenses and general matters from St. Maarten governmentt

TUESDAY, 06 MARCH 2012

PHILIPSBURG–The Audit and Criminal Investigation Department is understaffed with fifty per cent vacancies. Due to this there was not enough capacity to perform audits on rental cars, hotel rooms and timeshares, and the focus was on income tax, turnover tax and profit tax, government answered to questions posed by Members of Parliament (MPs) during the Central Committee session of last week Thursday.

The Tax Administration plans to perform audits and on-the-spot checks on the tax on rental cars, hotel rooms and timeshares this year.

The package of answers was delivered to Parliament by Finance Minister Hiro Shigemoto on Monday. MPs were given time to review the answers and to pose additional questions. Those will be answered by government in writing as well and sent to Parliament ahead of the plenary session on the draft 2012 budget.

MPs also learnt from the answers that not all casino fees are up to date “given the fact that some arrangements were made with the previous Executive Council. … The matter is being looked into now we are country St. Maarten.”

Dutch funding will come to an end this year and new partnership programmes with the Netherlands cannot be counted on, government said. “The intention is that after 2013, St. Maarten is self-sufficient and capable of financing projects out of our own financial resources. This is one of the reasons the Government is pursuing a policy of getting our financial situation in order.”

A strategic vision of the relation with the European Union will be presented in the second half of this year. A framework of the cooperation with the United Nations Development Fund (UNDP) and an “extensive 360-degree inventory” of other possible donors will be compiled, together with strategies involving those donors in the further development of St. Maarten.

The Netherlands Antillean tax holiday legislation still exists in St. Maarten. The tax reform exercise also will include the evaluation of the tax holiday legislation and tax incentives in general.

Three tax holiday requests have been submitted to the Governor since 10-10-10. There are some 15 tax holiday requests pending; among others, from Indigo Bay Estates. No concessions have been made yet regarding the Indigo project, as this application is still being processed, according to government.

As for tax incentives for companies that hire more locals, the Finance Ministry is of the opinion that it is very important to strengthen the labour market for locals. However, if the labour market does not have the local expertise, then the companies may have to acquire the expertise from abroad.

“Training our local people to acquire the expertise needed for these companies to be able to operate efficiently as opposed to giving out tax breaks would be a win-win for all involved.”

The claims of civil servants who worked for the Netherlands Antilles up to October 10, 2010, will be sent to the assets and liability division committee within the next two weeks. It was said to be “a long process” because information provided had to be completed by the ministry and verified.

Government further explained that the ministers’ basic salaries remained the same, despite reports to the contrary. For the 2011 budget, ministers’ allowances, with the exception of child allowance, were not known, so these were left out.

Those allowances – rent, car, telephone and personal – were applied in the 2012 budget after they were known. Applying these allowances increased the ministers’ overall salaries, including the vacation allowance, which is calculated as a percentage of one’s salary.

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.

Tromp updates ministers about Central Bank issues, meets with St. Maarten Tax Reform Group

WEDNESDAY, 15 FEBRUARY 2012

~ Meets with Tax Reform Group ~

PHILIPSBURG–The social economic impact of dollarisation, dissolution of the monetary union, blueprint for the Central Bank of St. Maarten, supervision of the financial sector and the development bank of St. Maarten were among matters discussed when the Council of Ministers met with Central Bank of Curaçao and St. Maarten (CBCS) President Emsley Tromp on Thursday.

Government had requested several months ago that the Central Bank do research into areas of strategic economic importance to the country. “We are very pleased with the information received, as this will assist with decision-making,” Finance Minister Hiro Shigemoto said on Tuesday in a government press release.

Tromp also made a presentation to the St. Maarten General Pension Fund and insurance agencies about investing and investment.

While in St. Maarten, Tromp also met with representatives of the Tax Reform Work Group led by Sissy Gonzalez-Fung. Tromp was briefed on progress by the group and his input will be incorporated in the reform exercise.

Tromp stressed the importance of tax policies that encourage greater diversification of the St. Maarten economy and provided insights into inter-island trade issues and how tax policy should be sensitised appropriately to prevent unhelpful distortions of trade among the islands.

He is said to have been very supportive of the reform exercise principles that aim to simplify the tax system and broaden the tax base for St. Maarten. Follow-up meetings on this topic will be held in the near future.

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.

Taxpayer info St. Maarten being updated, defaulters are to be assessed

WEDNESDAY, 01 FEBRUARY 2012

PHILIPSBURG–The St. Maarten Tax Department and the Receiver’s Office are working together to update the data on individuals and companies.

A number of individuals and businesses will be sent letters requesting information as to business details and their taxable status it was stated in a press release.

“As part of the tax reform programme being undertaken in 2012 and 2013 it is critical that the Ministry of Finance and the Tax Administration collect the taxes that are due each year from all taxpayers.”
As part of this exercise the Tax Administration – represented by the Receiver’s office and the Inspectorate of Taxes – are both working to collect reliable up-to-date information on individuals and companies doing business in St. Maarten.

The process of updating data will take place throughout this year and will continue into the early part of 2013.

“As a first phase in this process a number of individuals and businesses will receive a letter sent from the Tax Inspectorate requesting confirmation of their relevant details,” it was stated in the release.
The information letters will be sent to individuals and to businesses operating under a business name that is not known yet at the Tax Administration and which has no CRIB number attached to it. The CRIB number is the number that the Tax administration uses to identify tax payers.

The information letter contains a reply form that can be used if businesses need to update their data. Taxpayers can easily indicate any omissions on the reply form they receive; it was stated in the release. The Tax administration will then amend or remove the current information in the Tax Administration’s systems.

The Tax Administration has also been trying to identify those individuals and businesses seriously behind in their payment of taxes.

The letters therefore will also contain tax assessments for a reasonable estimated taxable amount for the year 2006. The answer form can serve as a protest letter where the taxpayer can indicate if he/she protests the assessment and provide the reasons why it is protested.

If the protest is justified, then the Tax Administration will swiftly revoke the assessments and update their files in this respect. Once the data is updated, assessments for the years following 2006 will be issued where relevant.

Individuals and companies that receive assessments should make sure to submit any protest letter by 6:00pm on Wednesday, February 29, if they do not agree with the assessments.

The Finance Ministry and the Tax Administration believe that the process of gathering and updating information is vital to a properly functioning country tax system. “If everyone pays the taxes they owe it also helps to keep taxes down for the majority of compliant taxpayers,” it was stated in the release.
Individuals and businesses currently not registered for tax purposes who do not receive a letter should also make themselves known at the Tax Administration by 6.00pm on Saturday, March 31, and apply for a CRIB number so that they can be included correctly in the Tax Administration’s records and can settle their tax affairs appropriately going forward.

Individuals and companies who have received the information letter may have some questions on how to deal with this. There is a dedicated project team at the Tax Administration building to handle such matters. That team can be reached at tel: 526-8127. Finance Minister Hiro Shigemoto says this process is another stage of the tax reform process of the country.

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.