THERE is no doubt that Minister of Finance and Planning, Dr Peter Phillips, has developed a special skill in keeping discussions on new taxes under control, until they are tabled in the House of Representatives during the Budget Debate.

This has happened despite the fact that the House of Representatives had gone as far as establishing a Tax Measures Committee (TMC) under the previous administration, which was dissolved just prior to the start of the budget process.

A proposal from the Ministry of Finance and Planning to the Standing Orders Committee of the House of Representatives, which is chaired by Speaker Michael Peart, prior to the tabling of the 2015/16 budget, had suggested that the committee be dissolved and its deliberations absorbed into those of the Standing Finance Committee (SFC).

In a request for modification of its performance criteria under the four-year Extended Fund Facility (EFF) with the International Monetary Fund (IMF) last year, the Government did not hide the fact that it would have conducted a study on the scope for imposing General Consumption Tax (GCT) on petroleum products, for possible implementation in 2014/15.

When the media sought an explanation in 2013/14 from Minister of Finance and Planning, Dr Peter Phillips, on why he was insisting that there would be no new taxes, when it was clear that he was seeking to impose SCT on petroleum products, he responded that:

“We don’t have plans for taxation. We have plans for tax reform, generally, but we will have to maintain our deficit targets.”

It was also announced that the Government would initiate a study on the scope for imposing SCT on petroleum products.

It was obvious from then that the minister was not interested in taking his proposed tax measures to the Tax Measures Committee, before implementing them.

Some of us in the media felt that this was not in the interest of the public, as it would remove the ability of stakeholders to make submissions to the committee on how the process should proceed.

The Tax Measures Committee was created in order that a more transparent approach to the introduction of tax measures could be implemented, following the “gas riots” which had followed some increases in tax on petrol in the past.

Where is the report on the study conducted on the scope for imposing SCT on petroleum products, and why wasn’t it sent to the PAAC, since the tax committee was dissolved? However, it seemed that Dr Phillip was determined to remove the tax committee from the pre-budget deliberations.

But why would the minister want to be so covert in dealing with the tax measures before tabling them in the House, after previous experiences?

On the surface it would seem that with his “Nicodemus” tactics exposed last year, when he tabled a $6.7-billion tax package after promising no new taxes, including the introduction of a levy on deposit-taking institutions and encashments from securities dealers which was projected to rake in $2.3 billion, the minister was determined to remove the possible glare of a committee.

The same issue has again arisen with the petroleum cess of $7 per litre announced on Thursday, when the minister opened the Budget Debate. According to Dr Phillips, the $6.4 billion from the cess will pay for a hedge on petroleum price fluctuations. However, he admitted that there will be a price effect on consumers.

“While there will obviously be a price effect from this measure, the specific effect on pump prices cannot be known at this point… I would finally make the point that I would hope, and expect, that market companies and individual retailers do not use the opportunity to change their margins to the disadvantage of the public and the economy,” he added.

It is interesting that Dr Phillips is giving the impression that he expects the marketing companies and the wholesalers/retailers to absorb the $6.4 billion in additional tax revenues, as well as an additional $1.8 billion from the replacement of the one per cent cess with the special consumption tax (SCT).

On Friday, the petrol retailers sought an extension of the period prior to implementation, to adopt the new measures because of adjustments that have to be made. However, the minister has rejected the proposal, on the basis that any delay would affect its revenues and fiscal targets.

But all of these issues could have been resolved prior to Thursday, if the minister had been more transparent in dealing with the fiscal issues, especially as they affect revenues. No doubt the minister learnt nothing from the uproar triggered by last year’s imposition of a cess on ABM withdrawals.

There is no doubt that an effective Tax Measures Committee, which would have heard submissions from the affected parties would have made the process much tidier. However, what can we expect from a minister with so much political blood running through his veins.

I am not surprised either that the Opposition’s spokesman on finance and planning, Audley Shaw, did not raise any complaint against the dissolution of the tax committee in February.

In fact, Shaw’s response to our query was that the tax measures committee had become a total waste of time under Peter Phillips.

“A little talk show which is not being used for any useful purpose, which is to take specific tax proposals before they are tabled,” he responded.

It would seem to me that the proper thing to do is that if the Opposition felt that the committee was not being properly used by Phillips, to press for the Government to allow the committee to perform the duties for which it was created and not to fulfill the designs of the minister of finance.

I am sure that if the Tax Measures Committee was fully operational and performing its task, the public would not be subjected to these tax surprises; the stakeholders would be fully informed and educated under a proper system of tax imposition; and there would be less fear of opposition and confusion.

And in the case of Shaw, he would not have been confused by the measures, having been led to believe that only minor tax adjustments were needed to meet a gap of approximately $2.5 billion and not the $10.3 billion in new tax measures announced on Thursday.

It is obvious that Parliament needs to have a tax committee, but one which is allowed to do what it was intended to do and not harnessed by the creativity of the minister of finance.

Shaw speaks in Budget Debate on Tuesday

Opposition spokesman on Finance and Planning, Audley Shaw, will have his chance to respond to the measures and the rest of the opening contribution from Dr Phillips, when the Budget Debate resumes at Gordon House on Tuesday.

The Opposition spokesman will address a number of points raised by the minister last Thursday, when he speaks in the debate at 2:00 pm.