Published On: Thu, May 12th, 2022

Cft advises the introduction of casino- and import taxes

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PHILIPSBURG — Financial supervisor Cft is highly critical of St. Maarten’s budget for the year 2022. Because tax revenue is falling 12 million guilders ($6.7 million) behind 2019-levels, the Cft advises Finance Minister Ardwell Irion to introduce as soon as possible a casino-tax and a tax on imported goods. In general, Cft-chairman Raymond Gradus states in a letter dated April 14 to Irion, the budget 2022 does not meet the requirements set forth in the kingdom consensus law financial supervision (Rft).

The Cft points out that the multi-annual budget shows deficits for the years 2023 until 2025. “The Kingdom Council of Ministers has only given permission for deficits in 2022. As prescribed by the Rft, St. Maarten must have a balanced budget starting in the year 2023, to prevent a further increase of debts.”

In 2025, St. Maarten has to pay off a bond loan of 73.5 million guilders ($41 million) that stems from the debt restructuring in 2010.

Because tax-revenue is projected to be lower than in 2019, the Cft advises the introduction of tax-reforms and to increase tax-compliance. The financial supervisor suggests furthermore that St. Maarten make a plan of approach for the collection of tax-arrears.

St Maarten has already made a start with the collection of outstanding long lease and permit fees. This will generate 7 million guilders ($3.9 million) in 2022.

In February the Kingdom Council of Ministers requested that St. Maarten includes the budgetary consequences of the country package in the 2022 budget. “Several revenues and expenditures related to the country package are part of the 2022 budget, but they are insufficiently substantiated,” the Cft notes. “Therefore the budget does not meet the standards of orderliness and verifiability.”

The Cft is of the opinion that St. Maarten has to adjust its 2022 budget to bring it in line with Rft-standards. The amendments must result in a significant reduction of the deficit, currently projected to be 124 million guilders.

The Cft recommends that St. Maarten makes a plan of approach for the collection of outstanding taxes and to increase projected tax revenue with at least 7 million guilders for catching up with outstanding long lease and permit fees.

Furthermore, the financial supervisor suggests to decrease expenditures for goods and services by 40 million guilders ($22.3 million) and to increase social expenditures from 28 to 35 million (from around $15.6 to $19.55 million).

Another advice is including the multi-annual consequences of the country package in the budget and to provide an adequate elucidation with it.

The projections for 2023 should be adjusted to balance the budget.

Starting in 2024 the government must generate surpluses on its budget, to create space for paying off the country’s debts.

The Cft also makes reference to the intention by Curacao and Aruba to decrease excise on fuel because of the increasing market prices. “The Cft asks St. Maarten to inform it in a separate letter whether it has similar plans. The consequences of measures to mitigate increasing fuel prices will have to be included in the budget.

In 2022 St. Maarten does not foresee any more financial support to combat the effect of the corona-crisis.