Minister Gibson: Reforming and simplifying our tax system



PHILIPSBURG – Minister of Finance Richard Gibson Sr. addressed members of the press in Wednesday’s, June 14, Council of Ministers Press Briefing.

He announced that the division of the assets of the Netherlands Antilles resulted in St. Maarten receiving its share of NAf. 59 million.

Minister Gibson also informed that the “government of St. Maarten is in the process of reforming our tax system, and the aim is to simplify our tax system, and to shift as much as possible from direct taxes, to indirect taxes and to stabilize government’s revenues at a level that would allow government to meet its obligations to the public.”

“Right now revenues are at a level that it’s insufficient to meet all of the obligations of government and maintain a balanced budget. Reforming our entire tax system is complicated and it’s quite a challenge. The reforming project is being tackled in segments and I’m pleased to report that yesterday (Tuesday, June 13) in the Council of Ministers, legislation has been approved to start cleaning up the clutter in our tax system,” Minister Gibson stated.

“Laws that are hardly used anymore and laws that no longer serve the best interests of the people of St. Maarten, and by cleaning up the clutter, new legislation will not be impaired by the existence of clutter, and the clutter is basically tax laws that existed before St. Maarten became a country. And in the process of reform we’re trying to get rid of those laws so that they don’t conflict with new legislation that is coming. The laws that we are cleaning up and which was the subject of the decision by the Council of Ministers yesterday was a repeal of the succession law. This law from March 22, 2012, parliament had already indicated its interest in repealing this law. Now the concrete step has been taken to take this off the books,” the Minister explained.

“Also an expression from Parliament is that they would also like to see property tax laws that are on the books, but have never been implemented for many years…That decision and approval of yesterday was to put in process in the pipeline that decision to repeal property taxes for St. Maarten, as well as a repeal of the surcharge that goes with the law on property taxes. We’re cleaning up the dividend tax, which also has not been producing anything,” Minister Gibson continued.

“So that’s also being taken off the books. But it still has to go through the pipeline to council advice and then back to Parliament for Parliament to make a final decision.  We’re also going to repeal the law on economic zones. Law and economic zones have been on the books for many years. For an area designated to be an economic zone that has never happened and there’s no thoughts now to make that happen and it no longer fits the time we are in,” the Minister further explained.

Also there is “a repeal of the hotel and industry tax facility. The experts have determined that law in the book granting tax facilities to hotels. That in almost all cases, the hotels come first and establish themselves…It is always after several years after somebody whispers ‘by the way you can get a hotel tax facility,’ and then they file. The procedure is very complicated and the proposal is to get it off the books. Those tax facilities will no longer be offered, as well as tax facilities for development of land. I don’t think anybody needs a tax facility to develop land. So these laws are all in a corner, the experts that we have used, and this goes back to 2015, they all recommend that we strike all of these laws off the books and those are the steps we’re taking right now with a decision from the Council of Ministers yesterday,” Minister Gibson informed.

Finally, Minister Gibson addressed government’s IT problems. “They’re vexing problems because the IT system has not been updated for many years, and the struggle government has had to make ends meet…There never was enough funds available to get a proper IT system, which we’re going to fix,” he said.

“We’ve also gotten a wink to see if we could have a substantial loan based on the fact that we’ve already produced two balanced budgets, to revamp the entire tax infrastructure that we have, including Inspection and Receivers Office. In fact to bring them both together under the same roof,” Minister Gibson continued.

“We’re talking about some NAf. 40 million order to make sure we have a proper IT system,” he informed.

“Because systems have been down for quite some time, and in fact we have a backlog in the Finance Department for months that we have to catch up on. It’s a vexing problem because we have deadlines to meet, deadlines for the budget, deadlines for your annual statements and they could be in jeopardy. So I just want to share that now just in case in the future you ask ‘how come you missed a deadline.’ That is directly related to the IT problems that we have experienced,” Minister Gibson concluded.