Ominous message about the St. Maarten Budget

POSTED: 10/26/15 12:52 PM

There was an ominous message in the address of Finance Minister Martin Hassink on Wednesday and one cannot say that it was hidden. He spoke about tremendous challenges with the 2016 budget (what else is new?) and of the need for serious measures to increase income and to cut costs.

Okay, maybe some will say, we’ve heard all this before, but it feels like the troubled waters the country finds itself in, financially speaking, are here to stay.

The ministers of the Gumbs cabinet submitted budgets that, altogether, would push the expenditures for 2016 to 510 million guilders, while the expected revenue for 2015 is around 440 million.

The Council of Ministers in the end approved a budget of 485 million guilders, but that is still 10.2 percent about the 440 million the treasury expects to rake in this year.

Thus the cabinet has narrowed the gap between desired expenditures and expected revenue from 70 million to 45 million but even Minister Hassink expects that the financial supervisor Cft will not agree with this.

Therefore, more cost cutting is necessary and the government needs more income too.

Terms like income and revenue will not trigger a lot of emotions, but the term tax hike probably will.

Government that prefer cutting cost to increasing income (read: increasing taxes) are rare and we do not expect our government – any government, really – to be any different.

Personnel costs remain a killer. With more than 200 million guilders it takes up more than 45 percent of the budget. The unions can go and stand on their heads all day long, but they will not get a cost of living adjustment for civil servants next year.

Cutting costs in this department can most likely only be achieved by a vacancy stop for non-critical functions and by letting go of civil servants who have reached retirement age.

Another field that warrants a closer look is subsidies. They make up about 20 percent of the budget. It is worth researching whether all this money is being put to good use and whether the recipients achieve their objectives.

We understand that the lofty budget of 250,000 guilders Culture Minister Rita Bourne-Gumbs announced for the celebration of St. Maarten Day simply is not there. The government does not have that kind of money to spend on a one-day event. If we remember correctly, the budget for this day is just 10,000 guilders.

While subsidies may come under increased pressure in next year’s budget, the government cannot be too blunt about this, because it would lead to a form of social poverty that nobody is waiting for.

What about income generating measures? There is an old plan to tax alcohol and tobacco. It met with fierce resistance from the business community and in the end, it did not materialize. We figure that the government will want to give this exercise a second chance, so count on it that smoking and drinking will become more expensive next year.

That’s not all of course: the government could decide to make work and residence permits more expensive and it could think about hiking up the road tax.

The seemingly forgotten trump card is however the national lottery. That plan has been around for some time as well. While one would think that governments in general have something against the promotion of gambling – because that’s what buying lottery tickets comes down to – that resistance focuses in practice mostly on the private enterprises in this sector.

Once gambling becomes state business, all bets are off: the state will relentlessly promote its own gambling house and encourage citizens to play. We all know that the odds to win a lottery – to hit the jackpot, that is – are slim.

Just imagine that the state would sell 30,000 tickets for 20 guilders a pop and advertise a top prize of 100,000 guilders. Since there is only one such prize to be had, a player will win it once every 30,000 times he plays. In theory, this means that buyers of lottery tickets have to invest in our example 600,000 guilders for the chance to win 100,000.

You don’t need a university degree to understand that this is a losing proposition. Amazingly, people buy into these schemes all over the world. The larger the jackpot, the more eager citizens are to get their hands on tickets. They would sell their grandmother if that’s what it took to put money on the table to play.

The attraction, certainly in a small community, is that somebody is going to win that top prize and more likely than not, many people will know the winner. That functions as yet another magnet to draw more players in.

So here we have the solution for at least part of our revenue-increasing options. That a state lottery is a playful way to collect taxes is beyond most citizens. They will pay the prize with pleasure, just for the thrill of anticipation on the day of the big draw.

We’re not sure whether establishing a state lottery is high on the list of priorities with our government, but it should be. Success is guaranteed and nobody will be complaining.

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