PHILIPSBURG--Finance Minister Hiro Shigemoto says St. Maarten Hospitality and Trade Association's (SHTA) interpretation of the changes to the turnover tax (ToT) law are incorrect, as is the analysis by Paul van Vliet of PricewaterhouseCoopers (see related story).
Shigemoto said in a press statement that he also had taken note of the SHTA's letter to Ombudsman Nilda Arduin-Lynch sent on Sunday in connection with the amendment of the ToT Law approved by Parliament on December 23.
"This misinterpretation and misinformation to the business community and the public at large will only lead to confusion and unnecessary worry. The Ministry of Finance has provided an elaborate explanation to Van Vliet with respect to the changes to the law," the minister said.
In its letter, SHTA stated that the association believes that while the increase was presented to the public as merely a change from three to five per cent in the existing legislation, the now published legislation introduces drastic changes to the turnover tax, depicting a completely different picture. SHTA is surprised that the Council of Ministers and Parliament would ratify legislation that is so drastically different from a simple increase of two per cent in the existing TOT.
The Ministry of Finance explained on January 7 in an "elaborate" e-mail to Van Vliet, who is also a member of the SHTA board and the Foundation Tax Committee, that his interpretation of Articles V and XI was not completely correct.
"There is indeed an omission in the ordinance, but that would be solved via what is known as a 'reparatiewet' or corrective law. Even if this reparatiewet was not done, which it will be done, even in such a situation the current law would not have led to the undesired situation as presented by the SHTA in its explanation in a letter to the ombudsman.
"The law operates under a clause known as the 'hardheidsclausule' whereby taxpayers can appeal their case when the law leads to consequences which were clearly not intended by the legislature. Any tax advisor would know this," Shigemoto said Sunday evening.
Commenting on the SHTA letter, the minister said: "I find it difficult to understand why the SHTA, after receiving an explanation from the Ministry of Finance, still decided to write a letter to the National Ombudsman complaining about the lack of cooperation with the SHTA with the compilation of the Ordinance on the Turnover Tax.
"Although as Minister of Finance I explained in detail to the SHTA the unfortunate, but realistic circumstances under which the government was forced to come to this temporary solution, still at this stage such an action is undertaken."
The ordinance has been established in compliance with all constitutional requirements and is therefore legal, he added. "Moreover, 'goods' are also taken up in the old Article V, paragraph three (3). The amendment will therefore only be applicable to services, in order to restore the level playing field. For 'goods,' the old situation will be maintained," the minister pointed out.
An information campaign will commence soon with representatives of the Ministry of Finance providing information to the community about the ToT increase from three to five per cent.
"The provision of information is essential in order to avoid situations of misinformation. Professional organisations as well as other well known personalities within our community should have all the facts at hand and a complete understanding of the issue before making public statements, which only creates confusion."
Government looks forward to working with all social partners to reach an understanding where all interests are taken into consideration leading to a new tax regime that covers the budget, Shigemoto said.
He added, "The basis of the relationship has to be on the principles of trust. If there is no trust and we choose to communicate in such a manner, then how will this help to lead to a professional, productive and constructive environment which should serve as a working platform between government and its social partners in coming to a better tax system for country St. Maarten?"
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