PORT OF SPAIN, Trinidad (CMC) – Trinidad & Tobago Finance Minister Colm Imbert Monday presented a TT$57.6 billion (One TT dollar=US$0.16 cents) budget to Parliament, providing for a tax amnesty, increase in fuel prices, inter-island travel and those exempt from paying income tax among other incentives.
During a four hour presentation, Imbert said that while the local economy is showing signs of recovery after two years of the coronavirus (COVID-19) pandemic, the government’s fiscal measures came very close to being a balanced package.
He said based on the consideration of all international forecast for the price of a barrel of oil, the 2022-23 budget is predicated a price of US$92.50 cents per barrel and a natural gas price assumption of six US dollars per Metric Million British Thermal Unit (MMBtu).
“As a result of these assumptions for fiscal 2023, total revenue is estimated at TT$56.175 billion. Total expenditure is estimated at TT$57.685 billion, and based on these assumption’s and estimates, we are projecting …that oil revenue will contribute TT$25.19 billion and non-oil revenue will contribute TT$30.15 billion” to the total revenue
He said capital revenue such as the sale of assets will contribute TT$1.006 billion. Imbert said with revenue estimated at TT$56.175 billion and expenditure of TT$57.685 billion “if all goes according to plan, our fiscal accounts in 2023 will be close to balance with a deficit of TT$1.51 billion or 0.8 per cent of GDP (gross domestic product).
Imbert said as a fiscal stimulus to the economy and a fillip to the retail sector, the government is providing relief to working families by increasing the personal income tax exemption limit from TT$84,000to TT$90,000 annually.
“All individuals earning TT$7,500 a month or less will now be exempt from income tax, “Imbert said, adding that the initiative, which goes into effect on January 1 next year, will benefit an estimated 300,000 workers.
“This bold measure will cost TT$450 million per year in individual income tax revenue, but we firmly believe that in this difficult COVID-19 period it will stimulate the demand side of the economy, economic activity, consumption, sales and growth by putting more money in the hands of consumers.”
He said also the government had agreed to increase the value added tax (VAT) registration threshold from half a million dollars annually to TT$600,000 providing relief and support in the payment of VAT, adding that it will positively impact the development and growth of small and medium enterprises.
The government is also providing incentives for developing the renewable energy sector, particularly in the agricultural sector and Imbert said for approved agricultural holdings the government will offer rebates up to TT$25,000 for the implementation of renewable energy such as solar and wind energy.
The government will also be providing incentives to the manufacturing sector with the Finance Minister indicating that a one-time manufacturing tax credit to companies that make an investment in new machinery, production lines.
“This manufacturing tax credit can be utilised against the corporation tax liability of the approved manufacturing company…up to a maximum of TT$50, 000,” he said.
Imbert said Trinidad and Tobago is an oil and gas based economy and as a result the government proposes to increase the investment tax credit for energy companies from 25 to 30 per cent “to stimulate exploration and development related investments in the energy sector.
“The total tax lost is estimated at TT$20 million annually,” Imbert said, adding that after careful analysis of the competitiveness of the country as an oil province for investment, the government proposes to enhance the current supplemental petroleum tax (SPT) for small on shore producers and introduce next year a tiered system of SPT at lower rates for shallow water marine operators as opposed to the current SPT fixed rate of 18, 25 and 33 per cent that takes effect as soon as the price of oil passes US$50 per barrel.
During his presentation, the finance minister said the government is of the view that it is unproductive to spend more than two billion dollars annually subsidising fuel to drivers and consumers and could be spent on other areas such as education, social grants and health.
“Spending billions of dollars subsidising fuel when this money can be directed to creating jobs and assisting the poor and vulnerable makes no sense in our view,” he said announcing a one dollar increase in premium and super gasoline and a TT$0.50 increase for diesel per litre.
Effective immediately, the new price for premium gas is TT$7.75, super at TT$$6.97 and diesel at TT$$4.41, Imbert said, adding that the cost of liquefied petroleum gas (LPG0 will remain fixed at TT$21 for a 20 pound cylinder of cooking gas for domestic customers “which will require the government to pay an annual subsidy of TT$300 million”.
Imbert said even at this new prices, if oil prices average US$95 per barrel for fiscal 2023, the government will still be required to spend TT$1.45 billion to subsidize the price of fuel. And if oil prices average US$90 per barrel in 2023, we will still have to spend TT$1.2 billion subsidizi8ng the fuel”.
The Finance Minister also indicated that the government had agreed to increase the penalty for oil pollution from TT$10,000 to TT$100,000.
Imbert said also because many businesses had severed severe losses due to the COVID-19 pandemic to the point of falling behind on the payment of their taxes.
“Although we introduced an amnesty in 2021, many businesses were still struggling to keep afloat and were unable to take advantage of the amnesty at that time. Accordingly, I propose to introduce an amnesty on penalties and interest on taxes owed up to and including the year ending December 31, 2021, from November 14, 2022, to February 17, 2023,” he said.
“This measure will require amendments to the various tax laws and is expected to raise TT$300 million to TT$500 million in 2023.”
Regarding the inter-island air and sea bridge linking Trinidad and Tobago, the government said it had recently procured two modern fast sea ferries and nine Boeing 737-8 to complement the aircraft fleet at Caribbean Airlines (CAL).
Imbert said revenues from international travel are used to subsidise the inter-island air bridge and that the rise in global energy commodity prices has resulted in higher operational costs for both the the air and sea bridge.
“In this regard and consistent with our overall policy of sharing the burden of the cost of transport, I propose to increase the cost of inter-island air travel for all tickets by TT$50.00,” Imbert said noting that the estimated increase in annual revenue to CAL for the operation of the airbridge will be TT$50 million, which, with this increased price will still require subsidy of the f over TT$50 million per year.
He said the estimated increase in annual revenue for the sea bridge will be TT$30 million, which will still operate at a loss, and would be supported by a subsidy in the amount of TT$170 million a year.
These measures will take effect on January 1, next year.
The government is also increasing by 100 per cent all firearm license fees (FULs) with the exception of assault weapons, which will have now significantly higher license fees than other types of firearms.
Imbert said the government also intends to restrict the ownership of assault weapons and associated ammunition by private citizens.
“In the meantime, while legislative amendments are being prepared to achieve this, the licence fees for ownership of assault weapons in private hands will be increased to TT$5,000 per year, while the annual license fee for ownership of an assault weapon for use a firing range with be increased TT$1,000,” he said.
The government is also implementing an apprenticeship allowance to encourage more businesses to hire persons aged 16 to 25 for short-term apprenticeship to provide them with relevant experience and exposure to the world of work.
“Companies will be eligible for an allowance of 150 per cent for all remuneration paid under such an allowance, up to a maximum of five per cent of the company’s total wages and salaries bill for one year. To qualify for this allowance, the training programme instituted by the company must be registered with the National Training Agency and the expenditure certified by the company’s auditors.”
Imbert told Parliament that despite the enormous difficulties and challenges, he remains confident that the resilience and support of the population, combined with the wide range of policies, projects and programmes which the government has put in place will sustain the momentum of the economic recovery.
“Having faced and overcome the many financial and economic challenges of the last seven years, we will make a positive difference in the lives of our citizens and leave no one behind,” he added.
Opposition Leader Kamla Persad Bissessar will respond to the budget presentation on Friday.