Home' Trinidad and Tobago Guardian : October 6th 2015 Contents 11
Tuesday, October 6, 2015 www.guardian.co.tt Guardian
Madam Speaker, I shall now present the
budget proposals for fiscal year 2016.
Madam Speaker, consistent with our 2015
Election Manifesto Promise, I propose to provide
relief to working families by increasing the
personal income tax exemption limit from
$60,000 to $72,000. All taxpayers earning
$6,000 a month or less will now be exempt
from tax and will not be required to file tax
returns. This will put additional income into
the pockets of these individuals by reducing
personal tax revenue by $250.0 million. This
measure will take effect on January 1, 2016.
Madam Speaker, in order to spread the bur-
den of adjustment across the society, I propose
to increase the Business Levy from 0.2 per
cent per quarter to 0.6 per cent per quarter.
This measure will increase revenue by $327.5
million and will take effect from January 1,
Madam Speaker, for similar reasons, I propose
to increase the rate of contribution to the Green
Fund from 0.1 per cent per quarter to 0.3 per
cent per quarter. This measure will increase
revenue by $544.5 million and will take effect
on January 1, 2016.
Madam Speaker, the base and efficiency of
the Value Added Tax regime have been con-
sistently eroded since its establishment in 1990.
I propose to improve efficiency in collection
and to broaden the base by reviewing and
adjusting exemptions and zero-rated items
which are associated with non-essential or
luxury items, and which are not critically
important to the livelihoods and basic cost of
living of our citizens.
And consistent with our 2015 Election Man-
ifesto Promise, I propose to reduce the Value
Added Tax rate from 15.0 per cent to 12.5 per
cent. The combination of widening the base,
increasing collection and compliance, and
reducing the rate is expected to yield approx-
imately $4.0 billion. Further, for better admin-
istrative efficiency, I also propose to increase
the threshold for Value Added Tax registration
from $360,000 to $500,000.
These measures will take effect on January
Madam Speaker, revenue authorities have
been proven to be extremely efficient in the
collection of public revenue; but it was unfor-
tunate in 2010 when the then Administration
had decided to put an end to the Trinidad and
Tobago Revenue Authority although technical
and administrative work was at an advanced
stage of finalisation.
We will restart the process for re-establishing
the platform for a Revenue Authority in the
country. It is expected that the Authority will
be in place by the end of the new fiscal year.
Coincidentally, the pre-budget bulletin issued
by the local office of one of the leading inter-
national accounting firms has identified the
improvement in tax administration as having
the potential to yield additional revenue in
excess of $5.0 billion.
Madam Speaker, we remain convinced that
property tax is a modern and fair tax which
is generally paid in all advanced, emerging and
developing countries. The pre-budget bulletin
issued by the local office of one of the leading
international accounting firms points to two
studies undertaken by the OECD in 2008 and
2010 which concluded that recurrent property
tax had "the least harmful effect on the econ-
omy...and was the least distortive tax of all
taxes including consumption taxes, personal
income tax and corporation tax."
We will take steps to amend certain legislative
provisions, including the determination of rates,
and implement the existing Property Tax Act
2009 with a view to having a fair and equitable
property tax regime in place by January 1, 2016,
using the old levels and old rates as a starting
point. To ensure that no-one in need is adverse-
ly affected, there will be special provisions to
ensure that the elderly and indigent with low
fixed incomes are not disadvantaged, wherever
they may reside.
Madam Speaker, we intend to secure our
revenue base. A significant leakage in our rev-
enue stream is our inability to capture the full
potential of the tax liability of foreign branches
of multinational corporations operating in
Trinidad and Tobago.
A majority of the volume and value of global
trade in goods and services is transacted through
branches and subsidiaries of multinational cor-
porations. Intra-group trade poses significant
challenges to taxing authorities as the multi-
national corporations seek to minimise their
global tax liabilities.
Transfer pricing rules with the application
of the principle of arms-length transactions
represent modern, fair and transparent practices
utilised by taxing authorities. These rules will
determine the tax liabilities of branches and
subsidiaries of multinational corporations there-
by constraining multinational corporations to
utilise tax mitigating structures, including mov-
ing transactions to lower tax jurisdictions with
lower tax rates.
Almost one hundred advanced, emerging
and developing countries have adopted transfer
pricing rules based on a model pioneered by
the Organisation of Economic Cooperation
and Development (OECD). We are advancing
work on the introduction of transfer pricing
legislation which will represent another mech-
anism in our thrust to optimise our tax rev-
Madam Speaker, the Government does not
receive its fair share of taxes from the gaming
sector, despite the size of the industry, the
number of people employed, and the amount
of revenue generated.
I propose to fast-track the passage of the
Gambling (Gaming and Betting) Control Bill
2015, with appropriate amendments arising
from consultation with all stakeholders. These
consultations will include the people involved
in the industry, the law enforcement agencies,
faith-based organisations and other non-gov-
ernmental organisations who deal with gam-
bling addictions and other negative issues asso-
ciated with gambling.
Following these consultations, we will put
in place in 2016 a suitable regulatory system
with appropriate controls to address chronic
gamblers and other negative issues which affect
families and the society at large.
Madam Speaker, we believe that every citizen
and every business should be encouraged to
take an active part in enhancing their own
Unfortunately, the existing incentives for
CCTV and alarm systems have proven to be
highly ineffective with many technical loop-
holes. I propose to revise immediately the exist-
ing technical specifications for these systems
to make them practical and workable, so that
we can implement an appropriate suite of
incentives and concessions to encourage actively
citizens to install suitable CCTV and alarm
systems in their homes and businesses in 2016.
Madam Speaker, the fuel subsidy represented
a public policy agenda which passes through
only partially the price of petroleum products
to the national economy. This arrangement
has raised a number of economic concerns. It
has distorted relative prices, fostered over-
consumption and in turn reduced oil exports.
It has also spawned smuggling and black-mar-
ket activities, and expanded a source of pol-
lutants with climate change implications. Very
importantly, the subsidies benefit the higher
income groups and it is felt that the money
spent on fuel subsidies will be better targeted
towards specific measures aimed at helping
the poor and the indigent.
The annual subsidy payments have been
placing consistent and adverse pressures on
the fiscal accounts of the country. In the four
year period 2011-2015 the fuel subsidy amount-
ed to a total charge on the public purse of $19.0
billion of taxpayers money.
In consultation with all affected stakeholders
we are reforming the fuel subsidy regime. We
will to embark on a national dialogue on this
issue in the near future.
Madam Speaker, at the present time, even
with very low oil prices, the price of super
gasoline at the pump in Trinidad and Tobago
is currently subsidised by almost 100 per cent.
Further, the price of diesel is subsidised by
over 200 per cent.
In order to initiate the process for a national
dialogue on fuel prices, therefore, and to reduce
the multi-billion dollar fuel subsidy, I propose
to increase the price of super gasoline by 15
per cent from $2.70 per litre to $3.11 per litre
and similarly, to increase the price of diesel by
approximately 15 per cent from $1.50 per litre
to $1.72 per litre. These new prices will take
effect immediately and reduce the annual fuel
subsidy by $340.0 million. Even with these
increased fuel prices, the fuel subsidy in 2016
is still expected to exceed $1.0 billion.
VAT reduced to 12.5 per cent
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