PHILIPSBURG:--- On Tuesday, July 6th, 2021 the parliament members of the Finance committee had a closed-door meeting with the CFT to be informed of the position of the CFT on the financial situation of the island.
A presentation was made by the chairman of the CFT showing some of the financial issues we are facing, the recovery progress, the vaccine level not being up to par for the industry, the stayover numbers, the cruise numbers etc.
Also discussed was the amended 2020 budget deficit of some 197 million guilders or about 20% of our GDP.
The budget 2021 presently has a deficit of some Naf 228 million and is awaiting ratification by the governor once the Ombudsman gives it a clean bill of health. The deficit is above 20% of the GDP and that’s something that requires our attention. More than Naf 400 million deficit in the past 2 years alone while our economy is only projected to grow 4% this year and 14% next year. I hope its more but that’s what the IMF has projected.
Considering the above, the discussion centered around finding low-hanging fruits to make cuts and also to create revenue-generating programs.
This caught my attention as the low-hanging fruits to cut spending were primarily in health care and in having the people pay more pension premium in line with the private sector. I informed the CFT that while this sounds nice, they should recognize that the persons that are paying pension premiums are mostly civil servants, employees of government-owned companies, and several other strong businesses.
To impose higher premiums on the people will only diminish their buying power and slowly wipe out the middle class on the island. Remember the strong businesses pay more than the civil service. Also, to make personnel cuts in line with other Caribbean countries was a vague proposal of bits and pieces, and it is in direct contradiction to the fact that government currently suffers of a shortage of Human Resources necessary to do the work required to meet all the conditions we are expected to live up to.
While I fully support the aspect of making cuts to safeguard the health care system and pension fund, I asked members of the CFT what their position was on national health Care or their thoughts on one of their equal partners in the Kingdom joining the Dutch national health care system so we all can be receive equal health care. The response was a smile.
To increase revenue the CFT proposed to follow the advice of the IMF to impose the land tax, the correct taxing of the gaming industry, and lastly to ensure tax compliance.
I am against just imposing a land tax because that’s the one asset that St. Maarteners still have that’s theirs. I am a proponent that luxury homes owned by NON-residents used as AIR BNB be taxed accordingly seeing we have no AIR BNB agreement.
I also informed them that tax compliance is something that needs to happen but let's be honest and also ask why the tax reform was moved from the Trust fund last year in June to the so-called COHO that still isn’t operational. We presently have put Naf 22 million on capital expenses to start ourselves. CFT should be here to help us understand our shortcomings and advice the Kingdom Council of Ministers on how to assist us and not how to cripple us. Last year the CFT fell short of advising the Kingdom Council of Minister not to stop the funding for the tax reform and the Financial Management projects, but today is critical that no improvements have been made.
I also questioned them on all the bullet loans we continuously are taking from the Dutch government at 0% for a duration of 2 years that they full well know we cannot repay in 2 years. Presently we are already in the hole for some 250 million guilders for 2020 and 2021 after we get the funds for this year.
If we are following the IMF’s advice we should receive grants and not loans. An interesting question is what the legal bases for all these loans are considering only loans for capital investments are regulated by law.
I questioned why CFT isn’t addressing the aspect of the serious problem the country has with undocumented persons and the strain that places on our healthcare, social and educational infrastructure. This group does not participate and thus does not contribute to cost cutting efforts. As this group does not form part of the formal economy, they make no contribution towards the solutions, but they are part of the problem. Don’t misunderstand me, undocumented people do contribute informally to economic activity, but they stress the social infrastructure to such an extent that we cannot carry it and it impacts the level of healthcare, education etc., of those who are properly documented.
I ask whether CFT would support St. Maarten to reopen the offshore sector as a diversification of our economy and not boggle us down with all sorts of money laundering and terrorism financing stories, while in the Netherlands this is a very big money-making industry. Again smiles, but no answer.
Finally I hoped to receive a position or opinion from CFT about all these loans the country is taking from the Netherlands during the pandemic as equal partners in the kingdom, opposed to grants given by the Netherlands to their EU partners. Once again, smiles but no answer.
In the overall I believe we had a very frank and open discussion based on mutual respect and hopefully a better understanding of the country’s dynamics. What’s possible on paper isn’t always workable in practice.
