PHILIPSBURG--Government hopes to collect some NAf. 48 million in revenue from foreign condo owners for tax assessments and back taxes, but Members of Parliament (MPs) are not convinced that this is viable.

As the debate on the draft 2012 budget started in the Central Committee of Parliament on Wednesday, several MPs asked Finance Minister Hiro Shigemoto to respond to their concerns. They will have to wait until the meeting resumes on Monday at 2:00pm for the information requested.

MPs fired off questions to ministers about figures in the budget and increased tax compliance to ensure that projected revenue amounts are attained. They also went into matters such as pension payments, tackling youth unemployment, and the need to update regulations so that lottery companies and casinos pay more fees.

MPs Frans Richardson (independent) and Louie Laveist (National Alliance (NA)) were very critical about government's failure to present precise policies during the meeting.

Laveist said Finance Minister Hiro Shigemoto's presentation was dry and smacked of disrespect for the people because it lacked details and was only about 15 minutes long. "Where is the culture policy in the budget ... the policy to educate the people? Where are we on fighting incest and where is it in this budget?"

Democratic Party (DP) MP Leroy de Weever said he could not comprehend that some 10 per cent of the budget, at a time of no economic growth, was tagged to a "new tax" on real estate, referring to government's move to have condo owners pay up for renting out their condos. "How can we include this realistically as earnings?" he asked.

He said international accounting companies outlined that "certain concessions" were given to foreign investors and this move would subject foreign condo owners to "double taxation" in light of the tax arrangements the country has with, for example, the United States.

A real estate tax was on the law books of the former Netherlands Antilles since the 1940s, but never applied to St. Maarten. De Weever asked whether it was government's intention to start imposing this tax locally as it is applied in Aruba and Curaçao.

MP George Pantophlet (NA) also wanted to know how government intended to tax the condos and whether there were plans to contact the US Internal Revenue Service to report the earnings of the foreign condo owners.

Frans Richardson pointed out that while the Committee for Financial Supervision CFT had given a cautiously positive advice on the budget, it also had concerns about the NAf. 48 million to be raised from foreign condo owners. The CFT has given Finance Minister Hiro Shigemoto until May to give a more detailed explanation on this item. It also questioned whether the five-year plan to improve the finance administration was in place and working.

MP William Marlin (NA) said government needed to explain how it realistically intended to collect NAf. 48 million from condo owners and whether the possibility of tax assessments being appealed and the time this could drag on had been taken into consideration.

Budget items

De Weever queried the budgeted amounts for Foundation Sports Upkeep Facilities, which he said seemed to have a discrepancy that would have consequences for the interest norm of government. The foundation's loan is NAf. 4 million with an interest rate of seven per cent per annum, with the interest for 2010 stated as NAf. 73,000. That interest amount is "not possible" and should be nearer to NAf. 240,866, he said.

United People's (UP) party MP Dr. Ruth Douglass questioned why St. Maarten Medical Center (SMMC) and other health- and family-related institutions had not been allotted more money. She queried the "income" projected from government buildings such as the Fire and Ambulance Building in Cay Hill. "How come they are paying rent?"

MP Jules James (UP) requested an update on the new Government Building on Pond Island, specifically a date when construction would restart. Government is paying some NAf. 6.9 million in rent for the empty structure. He wants an update on the removal of the five per cent turnover tax and the revamping of the tax structure that would make this a reality.

Independent MP Patrick Illidge continued his call to ministers to see across-the-board ways "to soften the burden of the people," to ensure their ministries and departments give service and for government-owned companies like GEBE to lessen their levies. Government must take control of its companies, he said.

Illidge said he still was not convinced the country was up and running fully after almost two years of existence, and recognised that Finance Minister Hiro Shigemoto was "struggling" with getting the financial administration up to par.

Paying taxes

MP Pantophlet (NA) wants government to explain the correlation between the growth in the workforce and why this is not reflected in the taxable income, as well as why the amount budgeted for the Justice Ministry had been reduced. He also requested insight into the long-lease land process, whether the Small Business Development Foundation (SBDF) tax and social premiums matters had been dealt with and whether a subsidy had been granted.

Pantophlet, as he had done during the 2011 budget debate, called on government to revamp the regulations for lottery companies and casinos so the fees levied could be increased and taxes could be implemented. He also was interested in whether government-owned companies were paying their concession fees.

MP Roy Marlin (DP) agreed with Pantophlet that some businesses such as casinos and lotteries were not paying their fair share of taxes. He pointed out that businesses such as MoneyGram must be better regulated, as well as the fast ferry service to St. Barths that puts no money into government's coffers.

He requested updates on the state of police vehicles, how much of the Justice budget had taken into account the police mobility plan, progress with "The Box" in Cay Hill (originally intended for residential purposes, but which Justice Minister Roland Duncan wants to use as a secondary prison facility), and implementing public transportation as a means of providing jobs.

Needs

MP Dr. Lloyd Richardson (NA) said there was great need for youth correctional institutions and for foster homes. There was also need to address youth violence, among other things – all areas highlighted in the ongoing Parliament hearing on social issues. He wants government to outline its physical priorities and policies to address these and other health and social issues, and asked how these were catered for in the budget and whether there were cross-ministerial approaches to deal with these problems.

William Marlin also wanted clarity on whether government had outsourced it's salary administration, about amounts spent on service level agreements, amounts outstanding on study loans, and whether all civil servants taken over by government from the former Netherlands Antilles, as well as from the former Island Government of St. Maarten had been placed in the new government structure.

The non-payment of pension premiums and the effect it has on workers when they retire was also a great concern for Marlin, as was whether all staff members of Parliament were being paid.

Business interests

MP Laveist pointed to "mild labour unrest" in the country and asked why the labour mediator was not involved in the Simpson Bay Resort case. He wanted to know if there was a policy plan to correlate the issuance of residence and employment permits, and when the fee for residence permits would come into effect.

He requested an overview of government vehicles; whether a sliding pension scale like Aruba's would be applied and begged the Tax Office to stop sending tax assessment letters to deceased people.

MP Silvia Meyers-Olivacce (UP) asked for how many years a business could be held accountable for back taxes and what happened if tax deadlines were not met. She suggested that the Justice Ministry could increase its revenues by setting up a team to check vehicle licences and to ensure all fees were paid.

"There is a lot of illegality on the road," she said. "Every government department should be upgraded and service should be improved for everyone."

She also recommended changes to curriculum to cater to the needs of the country. There should also be strong laws to protect locals and these should be adhered to by foreign investors, she said.

She also queried how payments to the Mental Health Foundation and foster homes affected the budget and whether these facilities were receiving the necessary aid.

MP Johan Leonard (UP) requested an update on the basic police training BAVPOL and recommended that Justice Minister Duncan institute a beach patrol to curb illegal vending. He thanked Deputy Prime Minister Theo Heyliger for helping with the reopening of the public toilets in the vendor market next to Parliament House.

Cut cost

MP Romain Laville (UP) said government had requested that people tighten their belts over the years to cope with the tough financial times and it was time that government did the same. He said government needed to shrink its electricity usage by turning to alternative, green energy. The NAf. 2.4 million spent annually on electricity could be reduced by using solar panels, for a savings of some 60 per cent, he said.

"That money could be spent on providing jobs for the youth," Laville said, and called on government to move more to a paperless administration as another cost-cutting measure.

He asked why there was no depreciation for government vehicles in the budget and why those vehicles were not parked after working hours to reduce maintenance needs.