Honorable Members of Parliament,
Further to the announcement of the proposed 66% TOT increase (3% to 5%) in the media, the following:
Based on consultation with SHTA members, the Foundation Tax Committee and government coalition faction leaders, the SHTA finds the proposed increase in tax is unacceptable as a quick-fix method to balance the 2011 budget in order to avoid possible higher supervision without government exhausting all efficiency and austerity measures.
For years the SHTA has advocated that the coming of change to Country St. Maarten offered an opportunity to reengineer government to an efficient apparatus and to get its financial administration in order. In fact the public sector has had 10 years to prepare a new public apparatus and tax system for Country St. Maarten.
Option B of the 2000 referendum was sold to the people as a revenue generating option for the island since the money sent on an annual basis to Federal government was deemed more than sufficient to govern the country.
Since the economic downturn in late 2008, the SHTA has requested some sort of economic stimulus from the Public sector to be put in place and to date no relief has been received, thus leaving the Private sector to manage its own resources in order to survive and unilaterally protect St. Maarten’s economic base.
As proposed, this measure at the very least would create spiraling inflation resulting in an increase in cost of living. Furthermore a shift to off-island purchasing thereby damaging local industry and potentially shrinking local tax base eliminating any potential tax increase.
In the event that Parliament would ratify the earlier decision made by the Council of Ministers, SHTA strongly advocates for the additional 2% to be placed in escrow for a period of 6 months only. The funds collected would be released with tri-partite consultation and on the following conditions:
1. Reengineer tax system and have tripartite consensus on a draft system by June 30, 2011 for following implementation January 1, 2012
2. Activate SER by January 31, 2011
3. Improve compliance focusing on unregistered and non-paying businesses and individuals
4. Ensure that St. Maarten is legally represented on the CFT and ‘Vereffenings committee’ by December 31, 2010.
5. A review of the current TOT legislation prior to January 1 2011 encompassing at least the following points:
– Make TOT 100% deductable from profit tax
– Reintroduce fiscal unity
– TOT receivables on sales system up to Dec 31, 2010 need to remain at 3%
– Review the present exemptions
– Eliminate the multiplier effect
Over the years, SHTA has been and will continue to be a proactive responsible social partner and will strive to work together with Government and organized labor in effectively addressing the many challenges that face us all as country St. Maarten.
Sincerely,
Emil Lee
President
St. Maarten Hospitality & Trade Association