FISCAL JUSTICE TO THE ST-MARTINER SOLD OFF IN A CASH & CARRY BUDGETERY DEAL WITH CENTRAL GOVERNMENT.
THE WRONG APPROACH
THE DEAL FOR ST-MARTIN TO BE ERECTED A TERRITORIAL COLLECTIVITY WAS GROUNDED UPON WRONG REASONS.
Even if one may not appreciated the fact that St-Barth has grounded its appeal for a constitutional change of status solely upon budgetary calculations, the truth nevertheless, remains that for the last few decades the Municipality of St-Barth was running on a quasi-autonomous budget, financed 76% from its own local resources and only 24% contribution from the Region, the Department and the State.
On the contrary the Municipality of St-Martin was dependent on exterior finances for 73% of its running budget, and therefore was not in a position to align its appeal on the same criteria as St-Barth.
Yet our elected representatives have upheld the identical arguments as St-Barth. All talks were restricted to a matter of budgetary sufficiency, transfer of competency, evaluation of extra expenses involved in the process, the carrying out of new invested powers and much more trivialities. The great neglected was The People’s future.
The future well-being or the latent poverty-stricken condition of the St-Martiners, economic and social stability, employment and unemployment compensation, fiscal justice, education, health care, social services, projects cooperation and finance etc. ……. were all absolutely excluded from the debate.
The 2008 budget handed down to the Collectivity by the Central Government as transferred competences from the State, the Department, the Region and the Commune in accordance with the ‘Organic law’ demonstrates the inconsistency of St-Martin being a Territorial Collectivity within the French Republic INSTEAD OF BEING FRANKLY AN AUTONOMOUS ENTITY.
The Central Government has simply disengaged itself as a financer guarantor, and relationship with the EU is the essence of ambiguity.
The latent insolvency of 99,95% of St-Martin households make it impossible for them to sustain a policy leading towards, to the best a 75% self-financing Collectivity and being within the French Republic make it impossible to appeal to international cooperation and projects financing.
The said organic law excludes all commitment of the Central Government in matters such as protection of equal rights or acquired benefits, or minimum standard of living guaranty, or fiscal harmonization, economic and social stability, that we should expect as we yet remain French citizens within the French Republic.
If the concept of article 74 of the constitution aimed to take us back into a system of the 1830’s known as the ‘Charte Coloniale’, today the decree fixing the budget of transfer of competences and the fiscal policy of the President of the Collectivity are undoubtedly leading towards a French feudal system of the 14th century (Une féodalité).
The evaluated expenses and resources in millions Euros are summed up as followed:
- Evaluated budget of transferred competences …………75 millions Euros
- Resources in availability……………...... 37 M€
- Resources in taxes to be imposed …… 33 M€
- Compensation remainder……………..... 5 M€
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REMARKS:
- The resources in availability amongst to the same as when St-Martin was run as a Municipality less the 5 million Euros compensation remainder, that will not be paid to the Collectivity but simple be considered as a neutral deal.
- The running expenses of the Collectivity is the double of the running budget of the former Municipality, but 51% (33 million Euros) of the budget of the new Collectivity are to be financed by local resources. This is a clear language saying: You want it! Pay the cost.
- 44% (14.5 million Euros) of the resources transferred in taxes to be imposed upon the local inhabitants, represent State taxes (IRPP, IS and tax on salary). This is surprising considering the July 1999 declaration of Dominique Strauss-Kahn, then minister of economy and finance, before a parliamentarian Commission by which he declared:
“Only an extreme feeble part of the population is concerned by tax on revenue(IRPP) declarations and practically no one is concerned about profits tax(IS) declarations”.
He further threaten “to bring St-Martin and St-Barth under fiscal law and order”
The least we can say is that the French Central Government whether in the hands of the left wing or in the hands of the right wing remains equally consistent in its policy regarding French Overseas Countries.
CONSEQUENCES:
Considering the fiscal dispositions for 2008 voted by the collectivity in November 2007, in favor of corporations and high standard living personal, in particular the grant of 40% reduction on revenue taxes added to taxes credits on private investments and the abolition of tax on salaries,
- For the year 2008 the fiscal pressure on poverty-stricken household will rise to 45 million Euros, this means a 300% rise in fiscal pressure compared to when St-Martin was run as a Municipality.
- Considering the usual 48% insolvency of the presumed taxes payers, the collectivity ends up 2008 with a lack in availability estimated to 30.5 millions Euros.
- For the year 2009 the fiscal pressure will rise to 500% compared to St-Martin run as a Municipality
- In the absence of compensation by the Central Government for tax alleviations and exemptions added to usual household insolvency, and the random fiscal policy of the new Collectivity, the lack in availability for 2009 rises to 57,5 millions Euros.
- Excessive fiscal pressure on households generates restrictions in purchasing power and this leads to economic and social instability and fatally to an insurrection.
No serious institution of finances will consent to a loan agreement with a Collectivity sinking in such a critical financial crisis
THE INCONSISTENCY OF THE PRESIDENT OF THE COLLECTIVITY
The president of the Collectivity in his new year’s speech, declared: “St-Martin is living exclusively on welfare and civil servants salaries. What made things worse was the exchange between the euro and the dollar”.
He further declared: “With leaps and bounds between 1986 and 1990 with up to 5000 hotel rooms, the figure today is more like 500 rooms”
In spite of theses declarations, the president only fiscal policy for St-Martin is:
- Alleviations, exemptions, fiscal credit in the only favor of corporations and high standard living personal
- Leaving the fiscal pressure on the only poverty-stricken households:
- The random creation of new taxes is placing St-Martin in an inconsistent situation with the Central Government budgetary legislation and the European Union legislation: Road taxes, Turn Over taxes etc ….. are derogatory regimes.
- Abolishing tax on salaries, usually oriented towards professional training
- Extending TH & TF to 3000 to 4000 new buildings or apartments registered by the ‘Cadastre, in a royal disregard for the living conditions of the households behind those walls.
A responsible decision to generalize house tax and property tax to 100% of households cannot be based on an exterior survey on non-registered buildings and apartments, but by having a full knowledge of the living conditions of the human being hidden behind those walls.
Be aware of given to this poverty-stricken but very proud people a justified reason to exercise their legal rights to welfare funds to enable them to pay taxes imposed on them from welfare funds just like all the others.
A rational economic and social policy instead of administrating serum to dying industries, will consist rather in reorienting the economy towards new areas: Trustworthy education and professional training, Information & Communication, Eco-tourism, Agriculture & Food processing etc…….
Of the 31500 inhabitants on French St -Martin:
- 15500 are school attendance population and Old-aged without resources
- 4000 are long term unemployed population
- 10500 are consisted of trans-border workers, of precarious contracted workers and of part time workers, all with a salary below an average of 50% of the SMIC (French minimum salary)
This leaves only an average of 1500 inhabitants (0,5% of the population) owning a decent living standard.
The evident truth is that of the 6500 households presently subject to property and house taxes, 30% benefits of alleviations or exemptions, 47% are paying from their welfare allowances, only 23% can afford paying from their personal income (revenue).
BUDGET OF ST-MARTIN RUN AS A COMMUNE
Resources in availability ………………………………………................ 37. M.Euros
. Local resources ……………………………....................... 8. M.Euros
. Contribution from State, Department & Region....... 9.
. Region contribution as “Octroi de Mer”……........ 11.
. Contribution as dotations & subvention……….... 9.
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Total 37.
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The running expenses of the former Municipality amongst to approximately 37 millions Euros and financed:
- 27% on local resources (Taxe d’Habitation/Fonciere & other taxes and services)
- 73% on contribution from Department, Region & State
If we should add to the above 27%, the State taxes ( IRPP, IS & taxes on salaries) approximately 5 Million Euros the total fiscal pressure on local inhabitants can be evaluate to a maximum 35% of the Municipality running Budget.
But considering the facts that:
- On one hand, the recovery of all Local and State taxes varied between 40% to 60%,
- And that on the other hand 30% of the inhabitants imposed on “Taxe d’habitation & taxe foncière” benefit of “dégrèvements & exonérations” granted by the Central Government and compensated by special ‘dotations’ to the Department and the Commune.
The fiscal pressure on the inhabitants remained within livable means.
PRESENTATION OF THE 2008 BUDGET
Total expenses transferred……………………………………… 75 M.Euros
Resources in availability:………………………: 42. Euros
. DGF………............................... 26.
. Octroi de mer........................ 11.
. DGE………............................. 00.
. DGC………............................. 16,5
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53,5
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Total resources in availability……. 53,5
Remainder due to the State on transfer: ................. -11,5
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Net availability……………….. .................................. 42
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Resources in taxes transferred:………………………………… 33 M.Euros
. From State………………………………........ 14.5 M.Euros
. From Region…………………………… ..... 1
. From Department……………………… .. 7.5
. From Commune………………………...... 10
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Total resources in transferred taxes: 33
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COMMENTS
- There is no “Dotation Globale de Décentralisation (DGD)” this means no participation of the Central Government in urbanization services.
- The chapter “Dotation Globale d’Equipement (DGE)” is void.
Contrarily to the other ‘Dotations’, the ‘DGE’ is not contractual, the beneficiary must in advance submit to the Central Government a program on priority investments that is to be approved by Commission within the “Conseil d’Etat”, before being subject to a law of finance.
The reason for this budgetary chapter to be void in the transferred budget can be explained either in the fact that the Collectivity representatives did not do their home work, either by the fact of the Collectivity having previously created a road tax oriented towards road construction and maintenance, has created an attributable incompatibility with the Central Government budgetary legislation.
Considering:
- The fiscal policy in favor of corporations and high standard living personal that will generate extra charges on the Collectivity in ‘Crédit d’Impôts’ & ‘Avoir fiscal’, and the abolishing of tax on salaries, the fiscal pressure on the poverty-stricken households sums up to:
- Total resources in transferred taxes ……. 33. M. Euros
- Crédit d’impôts & Avoir fiscal……………. 12.
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Total fiscal pressure……………................. 45.
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This represents a 300% rise in fiscal pressure upon the poverty-stricken households compared to St-Martin run under the status of a Municipality
By adding insolvency of Tax Payers, one can estimated a 30.5 millions Euros deficit in availability on 2008 budgetary year.
ANALYSIS OF 2008 BUDGET IN APPLICATION OF ART 104 FINANCE LAW 2007
Exceptionally for 2008, the Central Government had decided to grant a compensation provision for non-recovery resources in taxes transferred, evaluated to 16.5 million Euros.
Unfortunately, on one hand, the State’s transferred competencies to the Collectivity had been evaluated to 3 millions Euros in extra expenses
On the other hand the resources in State’s taxes transferred to the Collectivity had been fixed to 14.5 million Euros.
As result from the difference between resources and expenses transferred, the Collectivity ends up in debt, owing the State the sum of 11.5 millions Euros, leaving only 5million euros compensation from the 16.5 million Euros decided.
It is stated in the said article 104 that the whole transaction is to be considered a neutral deal. Therefore the remainder 5million euros will not be paid to the collectivity.
If we should consider the fiscal dispositions for 2008 taking by the Collectivity to grant 40% reductions on revenue taxes cumulated with deductible tax credit for investment, and abolishing of tax on salaries, not only the 14.5 million euros in revenue taxes transferred by the State as a resource will be gone to waste, but it will leave the Collectivity in debt of an estimated 12 millions euros in what is called in the French legislation “crédit fiscal” and “avoir fiscal”
PROJECTION OF 2009 BUDGET
For the year 2009, considering that:
- The Central Government will no more provide compensation for non- recovery taxes. The 16,5 compensation granted for 2008 will disappear. So this leaves the Collectivity with a full 33millions euros transferred as resources in the form of taxes to be collected locally.
- Most likely households confronted with insolvency are no more eligible to tax relief and exoneration, and we can foresee a generalization of rampant seizures against already poverty-stricken households.
· From January 1st 2009 the Collectivity must assume full responsibility for the recovery of its fiscal resources, no more compensation by Central Government, which was a policy meant to guaranty fiscal justice.
- The 11.5 million Euros owed to the Central Government is claimable in full
· The Collectivity will be in debt to the State for the full net 11.5 millions euros. This is by all evidence seems to be deductible for perpetuity from other contractual ‘Dotations Globales’. No trace of a protest made by the Collectivity to abolish such a condemnable abomination
· The 11 millions Euros in ‘octroi de mer’ granted by the Region for 2008 will also disappear. If not mistaken, no appeal for compensation has been made by the Collectivity.
· The tax TP that represented 5 millions euros and transferred as a resource from the Department, will be replaced by a license, if the fee is aligned to the Dutch side fixed to FL.1000 by profession, from this operation will result a lost in resource estimated to 3.5 Euros. Again no trace of an appeal made for compensation
PRESENTATION
Resources in availability:…………………………………………......... 14,5 M.Euros
. DGF…………………………………………........... 26. M.Euros
. Remainder due to the State on transfer.... - 11,5
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Net resources in availability ……................ 14,5
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Resources in transferred taxes………………………… 33.
Compensation on non-recovery 2008 taxes…………… 16,5
Non-renewal of “l’Octroi de Mer”…………………….. .... 11
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Total fiscal pressure on local inhabitants…… 60.5 M.Euros
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Considering the back-lash from the fiscal policy of the Collectivity in favor of corporate and high standard living personal that will generate extra charges in form of ‘credit d’impot’ and ‘avoi rfiscal’, the suppression of tax on salaries and the replacement of the ‘taxe Professionelle’ by an activity licence , from January 2009, the total fiscal pressure on local inhabitants sums up to:
- Taxes resources………………………………….... 60.5 M.Euros
- ‘Crédit d’Impots’ & ‘Avoir Fiscal’ …………… 16.
- Incidence on TP replaced by a licence………… 3.5
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80.
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This represents a rise to 500% in fiscal pressure on the poverty-stricken household, anda n availability deficit estimated50.5 millions to Euros on 2009 budgetary year.
March 20th 2008
CONCLUSION
The above analysis points out clearly a fiscal policy designed on one hand to exonerate and even gratify corporations and personal of high standard incomes or revenue, representing only 0,5% of the total inhabitant s and on the other hand to skin as sheep the already poverty- stricken households.
Add to this fiscal policy at random, it is clear that the Territorial Collectivity has no infrastructure development program, no economic and social policy and do not have the internal financing means to do so and more critically absurd, are incompatibilities generated by this random fiscal policy with legal requirements to be eligible to projects financing grants within the Central Government and the EU.
The random fiscal policy adopted by the Collectivity is placing itself out of the framework of the Central Government budgetary legislation and at the same time has worsen the contested derogatory regime in regard to the European Union (EU) legislation, an already latent conflict opposing France for its Overseas possessions to the EU.
Considering that the called ‘Commission consultative d’évalution des charges’, now in place in St-Martin, task is strictly limited to the only evaluation of the charges resulting from the transfer of the different competences an has nothing to do with the fiscal policy nor the economic and social situation of St-Martin, it is only left for us to pray God that St-Martin be saved from an insurrection,
GIVEN HOLLAND AND FRANCE REASONS TO REPROACH US AS BEING NOT TRUSTWORTHY AND LACKS INTEGRITY.
COOPERATION AGREEMENT
Under a constitutional democracy an act or a ruling is considered non-existent if the rules, procedures or formalities set forth by the constitution or the legislation are not scrupulously respected and followed in proceedings. Every body is to act within its legal competence.
By international public laws, a country is either independent, autonomous or non-autonomous or under international trusteeship.
Sint-Maarten being a Country within the Kingdom of the Netherlands is not recognized international capacity. It can only enjoy internal self-government or internal autonomy, but not autonomy in the sense of international law. This is very clear in the famous Hague November 2nd Agreement.
Saint-Martin being a Territorial Collectivity within the French Republic is not recognized international capacity. The word autonomous has been used to qualify the braking away from being a Commune of Guadeloupe. Proclaiming autonomy through a Territorial Collectivity status, it is to live in a fool’s paradise. St-Martin has no international capacity whatsoever.
Therefore as long as Sint-Maarten & Saint-Martin are classified “Foreign Nations”, local Government leaders are not invested with the capacity to take initiatives in international treaties, agreements, formal cooperation or joint projects.
The Memorandum of understanding and the Cooperation Commissions set in place between Sint-Maarten Island Council and Saint-Martin Territorial Collectivity are evident reasons for one to question our leaders trustworthiness and integrity.
A punctual delegation of power may be granted by each of their respective State, but this must be previous to establishing inter-Sides public relations or seeking ratification of accomplished facts.
It is different with the lieutenant Governor because he is not part of the local Government, but an appointed representative of the Kingdom and as such is invested by delegation of power with the capacity to carry out formal international relations in the name of the Kingdom. His acts remain subject to ratification by the Kingdom.
The same can be said of Préfet or Sous-Préfet as representatives of the State they can carry out formal international relations by delegation of power from the President of the Republic. These acts fall under article 53 of the Constitution.
But local Government and elected representatives are not recognized the international capacity to initiate or conclude formal international relationship and is a lack of credibility when given the People the image of being invested with international powers.
By article 52 of the French constitution international treaties and agreements are of the prerogative of the President of the Republic, and by article 53, France even has the constitutional power to put up our territory for sale.
Be not to fast to condemn Brinkman, member of the Dutch second chamber when he had suggested putting the Netherlands Antilles Islands up for sale on the Internet, he may be only quoting the constitution.
It is of the credibility of local leaders to know the limits of their competences and to take up in their hands the necessary process leading to their wished autonomy.
It is high time for Holland and France to abolish their absurd concept and classification of our little tiny island as two “Foreign Nations” and to respect the terms of our March 23rd, 1648 treaty by which the two sides of the Island is classified as a “COMMUNAUTÉ”.
But the initiative belongs to our elected leaders. The autonomy of a country come not through false illusions but through a dignified decolonization process.
This can only become a reality when we decide to get rid of our egocentric and conceited culture and stand up as one People, in dignity and integrity.
As long as our leaders continue to enjoy the conveniences in leading puppet government under the trusteeship of Holland and France, we will remain exposed to the shame and reproaches of European Statesmen, questioning our trustworthiness and integrity.
It is a crucial urgency for our Island to be governed under Community legislation in conformity to our 1648 Partition & Community treaty, and by so doing get rid for ever of the arsenal of national and international legislations, treaties and agreement, an eternal perpetuation of the absurdities of colonialism.
This urgency is more crucial when considering that both Sides are yet to be confirm on their future relationship with the EU, a choice of being an associated member (PTOM) or an integrated member (UPT). The policy of the EU being regional, it will be detrimental for each Side to go in opposite direction.
It is utopian to believe that the EU will finance major projects of common interest distinctively on both sides of the Island for a question of difference of French and Dutch nationalities. The EU projects financing policy is on a regional level, ignoring this fact is like running into a wall.
IMPLEMENTATION OF ROAD TAX
The legality in implementing a road tax on French St-Martin is questionable for more than one reason.
In the French ‘Loi de finance’, the former called ‘ Vignette Auto’, is not a road tax but a tax created in 1956 as a solidarity tax in favor of the old-aged population, in 1984 it was reoriented as a resource for environmental policy and called “Taxe différentielle sur les automobiles”.
France has been subject to many accusations from the EU, directly linked to the incompatible nature of this tax with the EU legislation.
In the year 2000 this tax was abolished by law of finance for all personal vehicles and for private owned commercial vehicles under 2 tons.
If St-Martin Territorial Collectivity is under the UPT regime of the EU, the implementation of this Road tax needs the EU approval as a derogatory regime to be legal.
On the other hand to attribute the resource from this nature of tax to road investment is derogatory with France finance legislation. This probably explains why the ‘DGE’ was not granted by the Central Government in the 2008 budget of transferred competences.
St-Martin Territorial Collectivity can only be eligible to State financial contribution and European Union projects finance if it uphold a fiscal policy in harmony with France and the EU legislation not excluding international rules. We have nothing to gain and all to lose by leaving fiscal autonomy go to our heads.
“ROAD TAX A MAJOR STEP FORWARD HARMONIZING WITH THE DUTCH SIDE,” NOT CREDIBLE
- On Dutch side property tax (taxe foncière) and house tax (Taxe d’habitation) do not exist,
- Profit tax (IS) on the Dutch side is between 35% and 45% without reduction, the Collectivity is leading towards total exoneration on profit tax and high revenue tax by 40% reduction cumulated with fiscal credits on personal and business investments.
- On Dutch Side garbage tax (taxe d’enlèvement des ordures ménagères) does not exist, the garbage service is finance by the tax on electricity.
- On the contrary tax on salary do exist on Dutch Sint-Maarten, but the Collectivity has just abolished it on the French Side
THE GREAT QUESTION IS:
What are the exact competencies of the State Administration installed in St-Martin?
It is the People’s constitutional right to be informed.
A word to the wise is enough
Léopold BALY
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