It seems efforts to improve fiscal compliance are starting to pay off. The Committee for Financial Supervision CFT stated in its March 1 letter (see related story) that income from long lease tax and casino controllers’ fees was higher than in the fourth execution report of pre-pandemic 2019.
Overall, income in the fourth report of 2022 surpassed the budgeted amount by 21 million Netherlands Antillean guilders of which NAf. 7 million from taxes, confirming a strong recovery of the dominant hospitality industry. The current account deficit dropped from the originally estimated NAf. 101 million to just NAf. 39 million.
However, that was largely due to underspending for goods and employees. Especially the latter is a concern because it indicates a continued lack of human resources to fill all vacancies, including capacity needed to, among other things, execute the so-called “country package” of restructuring measures intended to enhance St. Maarten’s resilience.
Mind you, NAf. 479 million or NAf. 11 million more than in 2019 was nevertheless spent last year. No less than NAf. 208 million of this went to personnel, an increase of NAf. 2 million compared to three years earlier.
That only NAf. 600,000 of NAf. 42 million budgeted for investment ended up being used sounds alarming but also has to do with the Dutch-sponsored Post-Hurricane Irma Trust Fund administered by the World Bank and its projects under management of the National Recovery Programme Bureau (NRPB). Considering that a balanced budget is required for 2023, things won’t be very different this year.
In addition, NAf. 132 million was owed in payment arrears to government entities and the total national debt stood at a whopping NAf. 1.1 billion or 49% of gross domestic product (GDP). As NAf. 292 million in liquidity loans lapse this October, reaching agreement with the Netherlands on refinancing and/or at least partial cancellation is obviously crucial to achieve sustainable public finances.
CFT again advised prompt implementation of tax reforms, but a word of caution remains in order not to overburden the still-vulnerable tourism economy providing much of the population’s livelihood. Rather than risk killing the proverbial goose that lays the golden eggs, first go after those who abuse the system by failing to contribute their fair share, and level the playing field for both residents and businesses in the process.
