SXMElections.com

PHILIPSBURG--Generating income through more tax compliance, rather than increasing taxes continues to be the aim of government. Reducing expenditures is also an integral part making government financially stable, says outgoing Finance Minister Martin Hassink.

Both of those approaches were employed in drafting the 2015 country budget. The budget is deemed "far too late already" to meet all the required deadlines. "This year it was very challenging to handle budget as all the ministries had plans and wish lists that far exceeded the available ceilings," Hassink said.

Some final steps need to be taken before budget is presented to Parliament for ratification. Those steps include the final handling of the draft budget in the Council of Ministers on Tuesday and review by the Advisory Council.

The Committee for Financial Supervision CFT has given its initial comments on the draft budget that stands at NAf. 445 million. That amount was based on realised income in the first half of 2014. The second half of the year saw "a reduction" of income.

That reduction of income in the second half of the year has led to CFT questioning the final budget figure. Government is "contesting" CFT's stance by coming up with arguments why the figure is a viable estimate.

"We will not adjust the budget," Hassink said.

CFT wants government to compensate for the NAf. 12 million in losses for the past years in the 2015 budget. Hassink said this would mean more cuts to operational expenses. "We came with alternatives, so hopefully they [CFT – Ed.] will agree."

Looking ahead, Hassink said the country needs a plan to get it out of the annual "struggle" with the budget and "the cutting to the bone" with expenses. He has been working on a plan to structurally increase government's income to some NAf. 500 million. That amount will allow government "to comfortably budget" its expenses.

Several projects to increase income and reduce expenses are ongoing. Compliance actions include reducing backlog in compliance assessments, reporting payments to service and goods providers of government to the tax administration, integration of work processes at the tax administration (levying-collecting-auditing), and structured income analysis with follow-up actions.

Creating awareness via monthly income reports to the ministries for analysis and follow-up with the goal of truly making the ministries responsible for their budgets in 2015 is also another approach to be used, said Hassink.

In the short-term, government will seek to collect overdue long lease fees, business license fees and director's license fees. Hassink said businesses that have not paid their license fees can soon expect a tax Marshall at their door for payments.

Other income increasing actions are restructuring tax legislation (medium term), adjustment of economic tariffs, collecting dividends and concessions and other contributions from government-owned companies and institutions by law.

At the end of 2013, the combined net asset value of our four main companies amounted to more than NAf. 500 million with cash reserves on the banks of more than NAf. 240 million of which NAf. 80 million was restricted.

The financial report for the first three quarters of 2014 will be presented to the Council of Ministers next week. After the ministers' approval, Parliament will receive the report.

The total income for the first nine months amounts to NAf. 334.4 million. This is about NAf. 4.4 million below budget, according to Hassink.

The total expenses for the first nine months stand at NAf. 326.9 million. This amount is about NAf. 2.4 million above budget,

The incomes and expenditures for the first nine months show a deviation from 2014 budget of minus NAf. 6.8 million.

Hassink is hopeful that in spite of this government will end the year with "a zero balance."

"Despite a projected economic growth, main income sources like wage tax and turnover tax don't show growth. That worries me a little. This may mean that projected economic growth is not realized or that non-compliance is growing, or a combination of that," Hassink said.

The increase in expenses is mainly due to an increase in personnel expenses.

"Special attention needs to be given to the personnel expenses, personnel occupancy and efficiency, remuneration packages, overtime and payroll related social cost (pension plan and medical expenses)," he said.