TOT increase could take up
to six months, says minister
PHILIPSBURG--To amend the federal ordinance and raise the Turnover Tax (TOT) from three to four per cent could take up to six months, Finance Minister Ersilia de Lannooy told The Daily Herald. This could seriously alter the intentions of the Executive Council for 2008.
The Minister is scheduled to meet with Finance Commissioner Roy Marlin today to discuss St. Maarten’s proposal to raise the TOT. “When the Commissioner was last in Curaçao for the political summit on constitutional affairs, we spoke briefly about the possibility of raising the TOT. I still have to get the proposal in details so we can look at what is possible,” De Lannooy said.
However, she said it could take up to six months to amend the federal ordinance regulating the TOT, as it had to be sent to Parliament.
In presenting the 2008 draft budget to the media, Marlin said that instead of introducing other projected income sources such as a garbage collection fee, an increase in road tax and a school bus transportation fee, the Executive Council had opted to request a TOT increase and secure the funding of additional expenditures in 2008 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 Social Economic Initiative (SEI) programmes, and constitutional changes.
The one per cent TOT increase should bring in NAf. 26 million extra for St. Maarten. But the Executive Council has also requested the Minister of Finance to consider lowering the gasoline excises that 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. The loss of revenue to the Central Government due to the lowering of the gasoline excise would amount to a loss of income of some NAf. 5 million per year and would have to be compensated from the TOT increase, thus bringing the net additional income to the local government attributed to the TOT increase to NAf. 21 million in 2008.
But if the administrative handling of the TOT increase takes about six months, it will mean that St. Maarten can only expect approximately NAf. 13 million in extra income for 2008.
This would mean that either some of the additional budgeted expenditures will have to be taken off the budget or that other projected income sources, such as a garbage collection fee or increase of the road tax, should be introduced.
