PORT OF SPAIN, Trinidad (CMC) – The Trinidad and Tobago Government Friday presented a TT$53.7-billion (One TT dollar =US$0.16 cents) budget to Parliament containing a number of new tax measures, as well as providing initiatives aimed at stimulating the local economy that has come under severe pressure from a decline in the global price for oil and energy products.

Finance Minister Colm Imbert in a more than three-hour presentation said that the Keith Rowley Administration would be selling off some State assets to deal with the multi-billion-dollar deficit, as well as introducing a new tax for people earning more than one million dollars annually.

Imbert told legislators that total revenue had been budgeted at TT$47.4 billion, which is TT$2.5 billion higher than the estimated outturn of TT$44.9 billion in 2016, but over TT$12 billion less than the original estimate of revenue for 2016.

“This 2017 figure includes the estimated yield of TT$1.35 billion in new tax measures and TT$9.6 billion in one-off revenues,” he said, adding that the total expenditure for the new fiscal year is pegged at TT$53.4 billion, “which is slightly above the estimated outturn of TT$52.2 billion in 2016”.

Imbert said that the fiscal deficit is estimated at TT$6.0 billion dollars for 2017, or 3.9 per cent of gross domestic product (GDP), compared with a fiscal deficit of TT$7.3 billion in 2016.

The finance minister told legislators that the budget is predicated on an oil price of between US$48 and US$50 dollars and a gas price of US$2.25 per mmbtu.

“It should be noted that our assumed oil price is below the IMF (International Monetary Fund) forecast of US$50 per barrel for 2017 and lower than the current price forecast by the World Bank, the US Energy Information Administration, the International Energy Agency of Europe, and so on.”

Imbert said that the core revenue to be derived from taxation, customs duty, royalties and duties is estimated at TT$37 billion, at least TT$20 billion less than two years ago.

“This leaves a fiscal gap in 2017 of over TT$16 billion, which must be financed by a combination of borrowings and drawdowns from the Heritage and Stabilisation Fund, and one-off sources of income such as the sale of assets, dividends from State enterprises, and so on,” he said, adding that new sources of sustainable revenue must also be identified to help bridge the gap.

He said the new fiscal measures would include legislation establishing the Revenue Authority next year, that will allow for greater transfer of information between the Board of Inland Revenue and the Customs, “which is needed to reduce the incidence of tax evasion.

“The new institution will also allow for taxing administration to be supervised by an independent board,” he said, addingm, “We estimate the first year revenue effect of the Revenue Authority …to be in excess of TT$100 million per year, rising exponentially thereafter.”

TRANSNATIONAL COMPANIES

Imbert said that the Government is also moving to deal with the practice by transnational companies to shift their revenue to avoid taxes, saying “illegal pricing arrangements have become a major source of tax evasion all over the world.

“The problem is rampant in commodity-producing economies where vertically integrated companies are able to shift profit centres to jurisdictions where the tax burden is lowest,” he said, estimating that Trinidad and Tobago has lost billions of dollars annually since 2011 as a result.

He said that property tax which had been abolished by the previous Government was being reintroduced in 2017 based on the legislation of 2009.

Imbert also announced that the Gaming and Betting Control legislation will be debated this fiscal year as the Government moves to stop the loophole of tax evasion in that sector.

“As a country, we cannot afford the expansion of an industry which remains largely illegal and unregulated with associated negative social effects, in particular on our young, vulnerable in our society,” he said, announcing that one of the legal consulting firms in the industry has concluded a report that the gaming market in Trinidad and Tobago had “rapidly emerged and in recent years had experienced uncontrollable growth”.

He said no other gaming market, including Latin America, operates “with as little supervision and oversight as do private members clubs…in Trinidad and Tobago”.

Imbert said that the Government expects the industry, when fully regulated, to “generate good-quality sustainable jobs and continue to be a major employer of people”.

DIESEL UP

Imbert said that the current oil price has again brought into focus the issue of a fuel subsidy, adding that “both premium and super gasoline will remain unsubsidised.

“However, at the budgeted oil price for 2017, a break-even price for diesel is three dollars per litre. It is proposed, therefore, to continue the incremental removal of the fuel subsidy and to increase the price of diesel by 15 per cent.

“Accordingly, the new price of diesel will now be TT$2.30 per litre up from TT$1.98 cents per litre. This measure will take effect immediately,” he said, adding that the price of diesel will now be 75 per cent of the true market rate.

Imbert said that excise duties on locally manufactured tobacco and on alcohol were being increased by 15 and 20 per cent, respectively, resulting in revenue of TT$60 million and from October 20, a similar increase in taxes for these products imported into the country will go into effect resulting in a further TT$60 million.

“The customs duty payable on alcoholic beverages and tobacco products imported into Trinidad and Tobago from extra-regional sources will be also be adjusted to receive equal treatment to that of the common market. The estimated yield from this measure is a further TT$60 million.”

Imbert said in order to ensure social equity, the Government proposes to introduce a new tax bracket of 30 per cent on high-income individuals whose chargeable income exceeds TT$1 million annually and on companies with chargeable profits also in excess of TT$1 million per year.

“Consistent with the objective of spreading the tax burden across the society, this measure will be introduced on January 1, 2017 and will ensure that higher-income individuals and corporations make an appropriate contribution to the fiscal adjustment effort. This measure is expected to generate from high-income individuals and businesses an additional $560 million in tax revenue.”

He said there will also be taxes on online purchases, which have increased significantly over the past few years.

“Reducing the demand for these items helps to save on foreign exchange and to assist local industry. There are 31 courier companies registered and bonded in Trinidad and Tobago, and it is estimated that the value of packages cleared by these courier companies exceeds TT$1 billion a year.

“Madam Speaker, as I announced previously, I intend to impose with effect from October 20, 2016, a seven per cent charge on purchases that arrive in Trinidad and Tobago through the courier companies or are brought in directly by individuals via air freight.

“This measure will generate approximately TT$70 million in additional revenue. The tax will be due and payable at the bonded warehouses before clearance of goods or directly to customs in the same way that VAT and customs duty are currently collected.

ASSETS SALE

Imbert said to support the national budget the Government proposes to dispose of several assets including the National Gas Company of Trinidad and Tobago Ltd, disposing of its residual 51 per cent shareholding in Trinidad and Tobago NGL Ltd (TTNGL); that is expected to generate TT$1.5 billion; and an additional 20 per cent of the Government’s shareholding in First Citizens Holdings Ltd, which is also expected to generate TT$1.5 billion.

He said to assist the less fortunate, Government proposes to exempt people whose monthly electricity bill is TT$300 or lower with a 25 per cent rebate on electricity charges, to take effect from December 1, 2016. This measure will benefit 120,000 households.

He said to stimulate the local agricultural sector, all approved agro-processing operations will now be tax-free and that over the next four years, utilising a public/private partnership approach, the Government will provide 50 per cent tax relief and other appropriate fiscal incentives to businesses which can mobilise private sector funding to provide public infrastructure and/or public facilities, amenities and services now provided solely by the Government.

“Projects that increase productivity and create meaningful employment will also be considered for inclusion. The Government would provide a proper clearing house to evaluate such proposals. This measure will be implemented in the first half of 2017. Further details will be forthcoming in due course.”

Imbert also announced that utilising a national talent search methodology, and a national competition, citizens will be invited and encouraged to present innovative business ideas for evaluation by a panel of accomplished businessmen and entrepreneurs.

“The top five projects annually will receive a $1 million grant to facilitate the development and implementation of their business concepts,” he told legislators.