NAf. 26M TOT increase
linchpin of 2008 budget
PHILIPSBURG--The Executive Council sent out a letter to Finance Minister Ersilia de Lannooy on Friday with the request to increase the Turnover Tax (TOT) by one per cent, from three per cent to four per cent.
The government hopes to raise an additional 26 million guilders through the increased Turnover Tax to take care of additional expenditures in 2008, Finance Commissioner Roy Marlin told a press briefing on Friday. He presented to the media the 2008 draft budget the Executive Council had approved last Tuesday.
He said he had discussed the TOT increase with the Minister of Finance during his last visit to Curaçao. He said she had expressed her willingness in principle to assist with effectuating this increase. However, the TOT increase will be subject to approval of Parliament.
Marlin announced that he would be travelling to Curaçao on November 29 to meet with the Minister again to discuss the transfer of the authority of the Inspectorate of Taxes to St. Maarten and the proposed one per cent TOT increase effective January 1, 2008, or the earliest possible date.
The 2008 draft budget has been forwarded to the Central Committee of the Island Council for further handling, Marlin said. The draft budget is balanced and has a projected total income of NAf. 314,953,818, including NAf. 44,777,667 being made available through Dutch cooperation programmes such as Dutch funding agency USONA and the Social Economic Initiative (SEI).
The largest source of income on the 2008 budget will come from wage taxes and is projected at NAf. 116,000,000.
Marlin announced that the Executive Council had forwarded a proposal to De Lannooy to increase the TOT by one percentage point, which should generate an additional 26 million guilders, to secure funding for additional expenditures in 2008 primarily in connection with infrastructural improvement, tourism marketing, social programmes for the youth, additional subsidies in connection with housing, educational purposes, matching funds in connection with the SEI programme and constitutional changes.
He noted that a number of projected income sources such as garbage collection fee, increase in road tax, and a school bus transportation fee had been eliminated from the 2008 budget.
“It is the feeling of the Executive Council that an increase of the TOT is a more justified source of a revenue generating measure, as this one per cent TOT increase is an indirect tax and is spread evenly among all residents and visitors to the island,” he said.
Taking into consideration the increasing cost of fuel directly associated with the constantly increasing cost of crude oil on the world market, the Executive Council has also requested the Finance Minister to consider lowering the gasoline excises, which now stand at NAf. 0.29 per litre, to NAf. 0.14 per litre. This would bring the price of gasoline back down to a more acceptable level of NAf. 1.95 per litre.
Marlin: “The loss of revenue to the Central Government due to the lowering of the gasoline excise tax to NAf. 0.14 would amount to a loss of income of some NAf. 5 million per year. This will have to be compensated, and our recommendation is to cover this from the increased TOT, thus bringing the net additional income to the local government attributed to the TOT increase to some NAf. 21 million in 2008.”
Also to be taken into consideration, Marlin said, was that the Island Government over the past two years had effectively lowered the income tax surcharge from 30 to 25 per cent when the minimum wage was increased, and the Central Government had lowered the wage tax during 2005 and 2006 by respectively 6 and 6.25 per cent, which had directly affected government’s income.
St. Maarten has seen an increase in the income from wage taxes in 2007 due to the strong economic growth in terms of increased job opportunities and the income from wage taxes is projected to increase further in 2008.
“We must all realise that going into Country Status requires additional expenditures in preparation for St. Maarten becoming a country.
“While the Dutch Government has shown its hand in terms of additional funding for programmes under the auspices of the SEI, as well as to further show its hand in 2008 by complying with the debt relief to the local creditors of government, we as a people also must come to realise our obligations to contribute toward the further development of our nation,” he said.
