Thursday, June 21, 2012

Taxand reform project sparks animated debate

~ Tuitt discusses concerns, irregularities ~

PHILIPSBURG--Several Members of Parliament (MPs) say they will call for a parliamentary inquiry if they are not satisfied with answers about United Kingdom Taxand's role in the drafting of a new tax structure for St. Maarten.

The firm was involved in executing work for the government under former finance minister Hiro Shigemoto and when the issue was discussed in a meeting of the Central Committee of Parliament Monday, it generated animated contributions from several MPs.

MPs supporting the National Alliance (NA)-led coalition had requested the meeting to address a letter from the Committee for Financial Supervision CFT about the perceived deficit in the budget. The Taxand issue was part of the discussion, as it was not specifically catered for in the budget. The meeting on this subject resumes on Monday at 10:00am.

In addressing the MPs concerns about the project, Finance Minister Roland Tuitt said his research since taking office on May 21 had found that the proper rules and regulations had not been followed. He also disclosed that legal advice on not paying Taxand the second instalment for work carried out was being sought.

Some NAf. 4.7 million already has been paid to Taxand, with another NAf. 5.5 million pending.

The contract to employ Taxand was never completed. It had only the signatures of the Taxand representatives. The draft agreement sought to give Taxand some 15 per cent of the funds collected from increased tax compliance, according to Tuitt.

The Government Accountants Bureau SOAB has been asked to give government an offer to carry out a review or an audit of the whole Taxand proceedings. Once the price is acceptable, SOAB will come up with terms of reference by which to gauge what Taxand has done.

The Taxand project, which is currently on hold, was estimated to cost US $11 to $14 million, excluding "out of pocket" expenses for Taxand personnel such as car, hotel, food and airline tickets totalling some US $290,000 every two weeks.

Tuitt pointed out that the rules that required government to go to an open tender for projects costing more than NAf. 50,000 or an investment project of more than NAf. 150,000 had not been followed. Also, no national decree signed by the governor to allow deviation from the norm was found.

As for the budget deficit, Tuitt said the good news was that revenue projections showed that "if things continue the way they are right now" the total income for 2012 would be NAf. 441 million, instead of budgeted NAf. 431 million. The increase, mostly due to Turnover Tax (ToT), will be sufficient to cover the NAf. 17 million payment of the cost-of-living adjustment (COLA), the periodic salary increase for civil servants and the NAf. 21 million hole left from the non-collection of back rent tax from non-resident condo owners.

Tuitt called Shigemoto's announcement shortly before leaving office that the COLA would be paid in June "premature," because the needed budget amendment had not yet been passed.

Democratic Party (DP) MP Leroy de Weever called for an explanation of the shortfall in the budget. He had been vocal during the budget debate about the collection of back taxes from condo owners not being feasible. He also was very incensed about a typographical error in this newspaper on May 25 about his questioning a NAf. 73 million hole in the budget, when it was actually NAf. 37 million, contending that it had not been a typographical error, but had been done deliberately.

Independent MP Frans Richardson questioned what would happen if the COLA was not paid and what factors had led to the realisation that the NAf. 21 million was not collectable. He also asked about family connections of government personnel to Taxand.

MP Roy Marlin (DP) wanted to know whether the windfall in ToT was sustainable and whether there had been consultations with civil servants on the Taxand project. He said there was a serious problem when work for more than $10 million was to be executed without an open bidding process.

Independent MP Patrick Illidge said he found it amazing that money had been found for the tax reform project with Taxand, but Shigemoto could have found none for the Middle Region Community Council. He asked for an explanation of the procedures for taking money from the reserves.

MP Louie Laveist (NA) said the Taxand project "smells to high heaven" and the balanced budget presented by Shigemoto was a myth. He said NA had warned against a "balanced budget that could be achieved only by "abracadabra." He added that Parliament had no clue about what was coming in projects or how the former government intended to pay for projects.

MP Dr. Lloyd Richardson (NA) said the Taxand issue came down to whether procedures had been followed.

MP George Pantophlet (NA) queried about the functioning of the Finance Ministry's internal control department.

United People's (UP) party MP Johan Leonard questioned whether Tuitt had received a complete transition document from Shigemoto. He asked for a detailed outline of what ministries had under-spent in the past months and whether Shigemoto had addressed the CFT's concerns.

Independent MP Romain Laville called for an overall financial audit for all ministries from April 1 to May 31, the final two months of the UP/DP/Illidge coalition. He said when discussions had been held in the former coalition about the budget, Taxand never had been mentioned. He said if the results of the audit showed discrepancies, "if heads have to roll, so be it."

MP Hyacinth Richardson (NA) said he remembered the Taxand project being mentioned in the budget debate, but no amount had been tagged to it.

MP Jules James (UP) said he knew Shigemoto to be a person who followed the rules and was not a "runaway or renegade" as he was being made out to be. He asked for the Taxand Agreement to be read out, what plans were in place to take care of the COLA payment and whether CFT was content with the last explanations given by Shigemoto. He also enquired about plans for the slow season and about the May financial outlook.

Source: http://www.thedailyherald.com/islands/1-islands-news/28470-taxand-reform-project-sparks-animated-debate-.html

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