STATEN VAN SINT MAARTEN

Transcription

1 STATEN VAN SINT MAARTEN lngek. 0 8 DEC 2016 National Ordinance to adopt the Budget of Country Sint Maarten for the fiscal year 2017 (National Ordinance Budget 2017) Vol nr. 6 0 / - Par. rain cr GOVERNMENT AMENDMENT Received Considering that the draft National Ordinance to adopt the budget of Country Sint Maarten for the fiscal year 2017 must be amended because of changes in the revenues and expenditures included in the draft; The draft shall be amended as follows: The production : Explanation to the Draft Budget Fiscal year 2017" shall be amended as follows: 1. Pages 2 up to and including 6 are replaced by the attached appendix Page 13 is replaced by the attached appendix Pages 18 up to and including 23 are replaced by the attached appendix 3. EXPLANATION Adaptation in the "Explanation book". The draft budget of Sint Maarten for the fiscal year has been presented to Parliament for discussion. Prior to the discussion the advice of the Council of Financial Supervision (hereafter: Cft), which reached the Government on November 29t h 2016, in accordance with article 11 of the Statute law Financial Supervision Curacao and Sint Maarten (hereafter: Statute law Financial Supervision). For the sake of efficiency, the period preceding the discussion of the budget in the Central Committee, was used by the Government to amend the budget so that the advice of the Cft ccould be complied with. For the convenience of the reader, first a summary has been included of the recommendations as formulated by the Cft; the recommendations have been numbered. It concerns the compliance with the following recommendations: Recommendations revenue account 1. Providing substantiation with regard to the payment of reserves by GEBE. 2. Substantiation of the relationship between the availability of the reserves of the ZWOV fund and the care system reform. Recommendation long -range budget 3. Correcting the arithmetical errors in the long-range budget and the draft budget where necessary to make adjustments.

2 4. Providing for a more detailed substantiation of the structurally estimated revenues from 2018, including the calculation bases used. 5. Not including or reducing to more realistic proportions, the structurally estimated revenues if these cannot be or cannot be sufficiently substantiated. Recommendations capital account 6. Providing information about the capital account with regard to depletion, obligations already entered into, planned investments and clarity on the completion costs of the new Government Building. 7. Returning the capital account to the level of a realistic investment agenda, taking into account the realization capacity. 8. Re-prioritization within the current capital account in case Sint Maarten wishes to invest in the Tax department. Recommendation resulting from the instruction 9. Amend the Budget in the event that incidental assets are materialized earlier and deducting this from the deficiency compensation in future years. 10. Indicating on the Budget, the manner in which the payment arrears shall be resolved. 11. Indicating the extent to which the measures to be taken, with respect to the care system and the provisions for old age have been taken into account in the budget. 12. Continuing to budget ANG 4.0 million in pension premiums, until the consequences of the system reforms have become clear and when these shall take place. Below is indicated per recommendation, the manner in which the instruction has been followed by the Government. Recommendation revenue account 1. Provide substantiation with regard to the payment of reserves by GEBE. RESPONSE POINT 2 The payment of reserves by GEBE has been agreed upon in a shareholders' meeting in which a part of the total reserves is set apart (17.7 million), which was paid out / transferred to the shareholder at the beginning of November The contribution has already been realized and therefore requires no further explanation. 2. The substantiation of the availability of the reserves of the ZV/OV fund and the care system reform. RESPONSE POINT 2 The availability of the reserves ZV/OV fund is separate from the care systems reform. The legal reserve which SZV must maintain for the ZV/OV fund is related to payments which must be made in the event of a so-called 'Act of God', such as medical expenses which arise in the event of a hurricane or the breaking out of an epidemic virus. In view of the very limited medical expenses resulting from category 5 - hurricane Louis in 1995, it may be stated that this reserve can be decreased and can therefore be available for the benefit of the Country that built up this reserve. After availability the reserve still comes to NAf 13.1 million, which, in the opinion of the Government must be amply

3 sufficient to take care of the care costs in a calamity'. The reserve is definitely not meant to co-finance shortages in the fund. In the care system reform, the measures necessary to keep the medical costs affordable for this and the coming generation of residents have been reviewed. The legal reserve of NAf 13.1 million is maintained in the new care system. This explanation has been included in the explanatory memorandum. Recommendations long-range budget 3. Correction of the repetitive errors in the long-range budget and adjusting the draft budget where necessary. RESPONSE POINT 3 The adjusted/corrected long-range budget has been fitted in, in the Budget by means of this Government amendment. 4. Providing for a more detailed substantiation of the structurally estimated revenues from 2018, including the calculation bases used. RESPONSE POINT 4 The following structural extra revenues from the year 2018 have been included in the budget: Increase tax compliance In the budget of 2017, for the year 2017 an amount of NAf 0.5 million and from the year 2018, a structural amount of NAf 5.0 million has been included. The Government plans to make investments in the year 2017 in the Tax Department. These investments are made in a new automation system, in additional capacity, in training and re-training employees and in a new building. This investment must result in higher tax revenues. The Government very cautiously assumes that the higher tax revenues shall amount to NAf 5 million. This is an increase of percentages of 1.4% as compared to the revenues for taxes included in the budget of Furthermore it must be noted that the NAf 5.9 million concerns a net result between additional revenues minus extra costs. Dividend Government-owned companies From the year 2018, an amount of NAf 12 million, in extra dividend has been included. This concerns the dividend of all Government-owned companies and interests together (Telem, UTS, GeBe, Airport, Harbour). In view of the profits which are made on a structural basis, the total dividend has been estimated conservatively at this amount. Only GEBE makes more than 20 million in profit annually. Telem contributes 3 million annually in the form of dividend and also the other Government-owned companies shall be encouraged by the Shareholders' meetings to contribute to the national revenues. Departure tax There is a bill being prepared, in which a departure tax is introduced for passengers of the airport as well as the ferries. In the same manner as done by the surrounding islands, a departure tax (for the time being) uniform, of US$ 5.00 shall be imposed. As point of departure is used a number of departing passengers of , thus attaining a structural revenue item of a good NAf 7 million. To be on the safe side NAf 6 million.

4 For a clear understanding, it is further important to note that the "departure tax", levied at the moment by the airport is not a tax, but a levy by and for the airport. There is no payment of any kind to the Government coffers of airport tax. The legislation in this respect has already been worked out in draft and the aim is to present the law to Parliament at the beginning of Because this concerns regulations which have not yet been approved, this revenue item has not been entered in 2017 and shall be included, upon realization, in the budget amendment. Fees and charges It has been years since business licences and transportation permits were modified. For years there has been no indexation, so that the relative part of this sort of revenues has decreased steadily. In addition, various sorts of professional/business categories have remained out of range and therefore do not contribute to society. An amendment of the law has already been prepared. Upon introduction of this law, a revenue increase is expected of NAf 8.7 million from Games of chance Casinos operate under the casino licences issued. The casino operators have to pay a monthly fee of NAf The casino fees shall be indexed, which eventually shall result structurally in NAf 9 million. The introduction shall take place gradually within 3 years; in 2018, approximately 6 million in extra revenues is being taken into account. A proposal to this end has been placed on the legislative board and shall be presented to Parliament at the beginning of This explanation has been included in the explanatory memorandum. 5. Non-inclusion or reduction to more realistic proportions, of the structurally estimated revenues, if these cannot be or cannot be sufficiently substantiated. RESPONSE POINT 5 The Government sees no reason to make adjustments to the structurally estimated revenues, in view of the cautious calculation method and basic assumptions, in use by the Government. For this line of reasoning see also the explanation to the previous recommendation. Recommendations capital account 6. Providing information about the capital account with regard to depletion, already entered into obligations, planned investments and clarity about the completion costs of the New Government Building. RESPONSE POINT 6 The Government, in the third quarter of 2016, approved substantial amounts for expenditures on the capital account, in the amount of in total NAf 14.5 million. This concerns renovation of various schools, infrastructural works, renovation of the Cay Bay Youth Detention Centre, phase 4 of the House of Detention and the camera project.

5 The Cft has not approved the loan request for the investments of 2016 in the amount of NAf 38.3 million. With that, all investment means have been depleted at the end of the third quarter of 2016 and no new investments can be made. The total available amount at the end of 2015 for capital investments amounted to NAf 35.0 million, of which NAf 18.3 million originated from the remaining monies from previous years and NAf 16.7 million as reservation for the new Administration Building. The expenditures at the end of the third quarter were in total NAf 22.1 million, thereby ending up with a remaining amount of NAF 12.9 million at the end of the third quarter. The Government decided to reserve this entire amount of NAf 12.9 for ICT-investments and the suiting out of the new Administration Building. This amount appears to be sufficient for the costs of completion of the new Administration Building. 7. Returning the capital account to the level of a realistic investment agenda, taking into account the realization capacity. 8. Re-prioritizing, within the current capital account in the event Sint Maarten wishes to invest in the Tax Department. RESPONSE POINT 7 AND 8 The Government, for the time being, sees no reason to adjust the investment agenda ( already approved by Parliament in 2016). The investment agenda assumes a realization of all investments which had to be postponed in 2016 because of the loan prohibition plus the additional amount of 6 million needed for investments in the Tax department. The investments in 2017 in the Tax department are therefore set at 10 million. Cft indicated in the past that a responsible borrowing level on Sint Maarten taking into account the economic growth, results in approximately 20 million per year. Even though such a limitation, as such has not been included in the Rft, Sint Maarten wants to take this advice into account. According to the point of view of Cft, the borrowing-leeway for 2017 amounts to approximately 60 million, since in 2015 and 2016, no new loans were taken out. With an estimated borrowing requirement of 59 million this budget shall remain within the boundaries of this Cft advice and one can speak of a responsible borrowing level. This explanation has been included in the explanatory memorandum. Recommendations as a result of the instruction: 9. Amend the budget in the event that incidental assets materialize sooner and reduce this on the deficiency compensation in years to come. RESPONSE POINT 9 The Government, during the preceding governing period made an effort to acquire extra incidental- and structural revenues and shall continue to do so in future. This is necessary in order to realize the repayment schedule agreed upon with the Cft. This schedule assumes a makeup during 2016, 2017 and 2018 of 20,20 and 24 million. If possible extra incidental revenues which ensure a surplus shall be used to make up the deficiency compensation at an accelerated pace. As a matter of fact, this also applies to the costs: the Government is working hard to reduce the costs, the hope is to end the year with a positive result, without this being at the expense of the stated objectives. The positive

6 result too in the cost range shall be used to make up the deficiency compensation at an accelerated pace. 10. Indicate in the budget in what manner the payment arrears can be resolved. RESPONSE POINT 10 In the budget the item has been explained as follows: The payment obligations to the big debtors are settled within 3 years. This ensures an excessive liquidity yield of some 160 million in three years. The other smaller creditors shall have agreements in payment arrangements or buying off arrangements in the amount of 11 million. Description *mill. *mill. Arrears APS&SZV 159 Liquidation 55 SEO-annulment 5 Sale Building 45 Land building parcel 4 Loss compensation Arrears other creditors 32 Loss compensation 10 Dispute BZV Cu 5 Dispute Telem 6 Payment arrangement smaller creditors Indicate to what extent, in the budget account has been taken of the measures to be taken with regard to the care system and the provisions for old age. RESPONSE POINT 11 The Government shall make great progress in the care system reform by means of the introduction of the National Health Insurance. In the mean time the draft of the basic legislation is ready, to which in 2017, more detailed interpretation must be given to making the legislation operational. Point of departure is that the new care system may not involve extra costs for the Government and that the shortages which have now arisen at the ZV/OV fund and the FZOG-fund are turned around. The effects of this have not been included in the budget at hand, as a precaution. As regards the reformation of the pension system, it may be noted that the negotiations with the Unions are going smoothly to such an extent that it is expected that the system amendment can be ratified in the first quarter of 2017 by way of an amendment and retroactively to January 1st 2017, in Parliament. This explanation has been included in the explanatory memorandum. 12. Continue to budget NAf 4.0 million in pension premium, until there is more clarity on the consequences of the system reforms and when these will take place.

7 RESPONSE POINT 12 The purpose of the long-range budget is to paint a picture of the expected developments, in which it is naturally assumed that insecurity increases, the more the estimated period lies in the future. Partly in light of the instruction and the progress made in legislation with regard to the pension system, it is very plausible that implementation of this shall be realized from The Government endorses the fact that a conservative budget for the coming fiscal year is based on realized legislation, but for the following years requires a realistic picture of the revenues and cost development. The Government therefore wishes to have the pension premium for those years fit in with the policy, the expectations and the projected reality. This explanation has been included in the explanatory memorandum. The Minister of Finance The Minister of General Affairs. Translated by: Gracias M.M. Maccow Sworn translator