TOT increase proposal sent
to Saba, Statia for approval
PHILIPSBURG--To increase the Turnover Tax (TOT) from three to four per cent, Saba and St. Eustatius must also agree with the proposal made by St. Maarten.
If they do not agree, the law regulating the TOT will have to be amended, and that could take an additional six months, forcing the island of St. Maarten to make changes in its budget.
Finance Minister Ersilia de Lannooy told The Daily Herald Tuesday that she had had a fruitful meeting with St. Maarten’s Commissioner of Finance Roy Marlin last week Monday, discussing the proposed TOT hike, among other things.
“We received all advices concerning the increase of the Turnover Tax and decrease of other taxes being levied in St. Maarten. Now we have forwarded all the information to Saba and St. Eustatius,” the Minister said.
If the two islands agree to the TOT hike it can be realised relatively quickly through a Central Government decree. However, if the two island territories do not agree, the law may have to be amended to accommodate St. Maarten’s request, the Minister said. The process to amend the law could take up to six months.
De Lannooy said she had ordered the Judicial Department to start working on a draft law amendment in anticipation of Saba and St. Eustatius not agreeing to a TOT hike.
She explained that the Windward Islands are administered as one tax territory, and if only St. Maarten is to increase the TOT the island territory would have to be treated as a separate tax territory. This can only be done by amending the ordinance regulating the TOT.
According to the approved 2008 budget, the proposed one per cent TOT increase should bring in an additional NAf. 26 million for St. Maarten.
However, the Executive Council has also requested the Minister of Finance to consider lowering the gasoline excise, which now stands 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.
The loss of revenue to the Central Government due to the lowering of the gasoline excise would amount to some NAf. 5 million per year and would have to be compensated from the TOT increase, bringing the net additional income to the local government from the TOT increase to NAf. 21 million in 2008.
However, if the administrative handling of the TOT increase takes another six months, St. Maarten can expect less extra income for 2008. This would mean that either some of the additional budgeted expenditures would have to be taken off the budget or other projected income sources such as a garbage collection fee or increase of the road tax should be introduced.
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