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Minister Tuitt: Cft may be going beyond the law

St. Maarten – The board for financial supervision Cft is becoming more than a thorn in the side of the governing coalition who has been unable to present an acceptable budget to the committee. Finance Minister Roland Tuitt seemed more than peeved during yesterday’s Council of Minister’s press conference when he accused the Cft of going beyond the scope of its duties.

“As far as we are concerned, we think that the Cft is momentarily going a little overboard in terms of what was stated in that law.”

The government is expected to meet with the Cft today, where Tuitt says that he will once again try to impress upon the board that the 2013 Budget needs to be approved post haste. He wants a further discussion on the procedures used to evaluate the budget and the possibility of a revision on the rules of financial supervision.

“If you look at the Kingdom law which regulates higher supervision and the Cft, then you will see that in that law you will see that the law was based on several pillars one of which is that St. Maarten will get a clean start. That was not the case.

If you have a law and it’s based on pillars and some of those things are not in place then lawyers will start to question the law itself. Within the law that governs the operation of the Cft itself, it states specifically what the task of the Cft is?” Tuitt said.

The Finance Minister said that he is in the final stages of the 2013 Budget which totals 476 million guilders. The Cft gave the draft a negative advice last month.

The financial supervisor is especially concerned about the way St. Maarten deals with the deficits from the 2010, 2011 and 2012 budgets. These deficits alone total 33.4 million guilders. The Cft wants St. Maarten to compensate these deficits in its budgets for the next three years at a pace of 11 million guilders per year. St. Maarten has to follow an instruction from the Kingdom Council of Ministers to cover these deficits by 2015.

“When you are evaluating a budget you are basing your evaluation on assumptions. As an institution, you have to look at the assumptions and once they are reasonable then you as an evaluator have to go along because you already accepted the assumptions.  For you to be able to accept assumptions, you must work with a tolerance level.”  In accountancy we work with a 5 to 10 percent tolerance.”

Tuitt is relying on his years of experience as an accounting professional to further convince the Cft. He referred to his previous position of audit manager for a major firm in Holland, to make a case for more tolerance from the financial body.

“When we found mistakes of 100 million guilders in those days, it was not corrected because 100 million guilders was not above the tolerance level. So there you see that you have to work with relevance and perspective.”

Tuitt reiterated that the government has not projected a 10 percent increase in tax compliance to acquire revenue; instead the figure is less than 5 percent.

“We decided to be conservative and reduce the tax compliance increase to 5 percent. This resulted in tax compliance revenue of 24 million guilders. So we took off 4 million guilders. We are under 5 percent. We are increasing the compliance that was requested to be increased by less than 5 percent. If the number that comes out of the less than 5 percent is 20 million, then so let it be. If you agree that the basis and assumptions are correct then you have to agree with the number than comes out. The number than rolls out is just a matter of cause and effect,” the minister said.

He also cited reports from the International Monetary Fund which have called for countries to promote growth in macroeconomic policies.

“The IMF has stated in reports to France and a lot of other governments in the world that as a government you cannot keep cutting costs without looking at growth.  How can a government promote growth? By investing in projects, so once we get the budget approved, we can get the loan approved and invest in projects so that the economy can pick up.”

The minister is also optimistic that the economy will grow this year. The government had projected growth of between 0.2 percent and 0.4 percent however the Central Bank of Curacao and St. Maarten foresees a 1 percent growth for the island.

“That is good news in a projection. So there you see we have a space to implement growth in the budget,” the minister said.

The minister maintains that there is no rift between the Cft and the government and that the two maintain a good working relationship.

With turnover tax alone for 2012, the amount was 14 million guilders and the minister expects when wage and other taxes are added, the total amount should serve as enough proof to the Cft that the government’s compliance estimation of 20 million guilders is reasonable for this year. This information, the minister said, was recently supplied by the Budget and Policy Department.

Prime Minister Sarah Wescot-Williams wants the attention to remain on engaging the Kingdom government.

“The Cft can’t change or act other  than the law and the context within which they have to operate but I do believe that we need to keep the door open to discuss the larger financial picture for St. Maarten going forward with the Kingdom government.”