Home' Trinidad and Tobago Guardian : October 8th 2015 Contents "Some of our behavioural patterns nurtured
over the past must shift. Unsatisfactory levels
of productivity, insensitive customer care, lack
of competitiveness, social inequity and a lack
of transparency must be left behind.
• We must hold ourselves accountable as
individuals, as families, as institutions as civil
society and as a government.
• People must be held accountable for the
past recklessness in our financial sector and
the harm they have caused to many vulnerable
• People must take responsibility for their
• People must comply with regulations and
• We must exercise fiscal responsibility.
• It is time to take responsibility for adhering
to the rule of law"
You may be forgiven for think-
ing that the above quote came
from the 2015/16 Budget pre-
sented by Minister of Finance,
Colm Imbert. In fact, the
words quoted above came
from then Finance Minister, Winston Dookeran
in delivering the 2011/12 national budget.
Two points need to be made. The first is
that the more things change, the more they
remain the same and, secondly, it is easy to
talk the talk but much harder to walk the walk.
The 2015/16 Budget presentation set the
right tone at the right time given the state of
affairs in T&T. However, the devil is always
in the details and the fruits will come from
proper implementation. What is before us is
simply the first step on a long, hard road.
A central theme of the budget was that of
shared responsibility across the board. The
catalyst for the need for "share responsibility"
is the significant fall off in energy revenues.
In the end, a good crisis has brought us to a
point where we should have been many years
ago. Let s hope we make full use of the oppor-
It was prior to the reading of the 2012 Budget
I suggested, in my weekly Business Guardian
column, that the theme of that budget should
have been "Shared Responsibility and Sacrifice."
Instead, we got: "Stimulating Growth, Gen-
The then People s Partnership (PP) failed
to appreciate that in moving from a recession
to sustainable growth you had to engage in a
sharing of the responsibility. Otherwise, the
overdependence on government to drive the
process forward would be compromised if rev-
enues faltered once again.
It was in July 2010, with the PP two months
in office, that I wrote on the issue of tax col-
My point then was that improved tax col-
lection "goes a long way to rebuilding the rev-
enue base and for the majority of citizens who
were properly contributing to pay for the goods
and services provided by the State this rep-
resents a fairly painless exercise. The collection
of VAT, the activities of the self employed
professionals, small and micro enterprises and
of course corporate T&T should be better
policed from a tax perspective in order to
improve the level of receipts."
I have repeated that call every year for five
years, to no avail.
In 2012, the point was emphasised with:
"It is inconceivable that a government can say
to the working class that there are insufficient
resources as it relates to wage negotiations yet
not work to close the many tax loopholes and
areas of non compliance, especially gaming
taxes, that exist in the system. Generally speak-
ing, all salaried workers pay their proper level
of taxes and have been doing so for decades.
Yet these are the ones who also face the brunt
of high levels of inflation and the financial
repression that comes from a near zero rate
of return on savings."
It seems that, finally, the issue of improved
tax collection is now on the front burner.
However, I wonder if we are going far enough.
It is important for this administration to appre-
ciate that tax receipts are, in effect, pro-cyclical.
In an economic slowdown as we are experi-
encing now, business activity slows and some
job losses occur. That in and of itself speaks
to a reduction in tax revenues. The best way
to compensate for that is to expand the tax
base and so the issue here is more than just
Blowing the whistle
There are many taxable individuals who
stand outside the system and they need to be
targeted. The proposed Revenue Authority,
with closer links to the Customs and Excise
Division, only speaks to one part of the puzzle.
This approach may tighten the issues around
assessing business activity associated with
imports but what about the growing services
sector in particular the self-employed and
professional class that don t pay their fair
share. Then, of course, you have the under-
ground economy and even white-collar crime,
for which we are paying a hefty amount via
the national security apparatus to manage.
Many of the budgetary proposals on offer
seems to be the giving with one hand and
taking with the other. In some instances, it
would have been better if nothing were done.
Lowering VAT to 12.5 per cent will simply
result in a price rounding that will see no
change to the customer. It is estimated to be
$1 billion in revenues foregone.
Adjusting the Business Levy and Green Fund
rates will generate just under $1 billion but
this is essentially a nuisance tax that should
be eliminated over time. The net effect of
these two measures is nil, so what was the
Similarly, it would have been far simpler to
peg the fuel subsidy at $45 oil (no immediate
impact on prices) and let fuel prices rise as
the oil price rises than to implement a one
off 15 per cent hike. I always maintain that
market forces are the best way to manage sup-
ply and demand and to promote efficiency.
In a period of "cutting your cloth to fit" I
am wary of the number of proposals for special
purpose vehicles that seems to be in the mak-
ing. We already have more than 90 state enter-
prises with over 80 that are loss making.
The complaints about the Central Statistical
Office are well noted but do we fix what is
broken or set up a new statistical body alto-
gether? This new body is supposed to work
closely with an Economic Development Board
for the purposes of medium-term planning.
If, so, what then is the role of a Ministry of
Planning? More special purpose entities are
being proposed for sport, let us not forget the
lessons related to Life Sport.
With the public sector investment pro-
gramme being cut back, surely there is a case
for looking at companies that focus on urban
development, rural development, national
infrastructure development, etc.
Just as the number of ministries were
streamlined, the number and role of the mul-
titude of special purpose vehicles should also
be rationalised. Don t waste a good crisis.
At the end of the day, the issue of revenue
collection has to be in concert with targeted
cuts, but progress on the revenue side is really
expanding the tax base.
Another special purpose vehicle, the Revenue
Authority, is being positioned as the vehicle
to accomplish this. Undoubted some type of
reform of the tax authorities is needed, how-
ever, by simply fast-tracking the manifesto
promise (which is now government policy) of
whistleblower legislation, things can be sorted
out quite quickly.
True whistleblowing where reports are made
to an independent foreign-based entity that
specialises in these activities---and so have a
professional reputation to protect---gets the
ball rolling. Giving them the power to request
that various agencies collect preliminary infor-
mation to verify reports is a key next step.
Linking whistleblowing to the area of tax
compliance and then providing the information
to the tax authorities completes the loop. In
many countries, an incentive of a percentage
of the taxes collected (10-25 per cent) is paid
to the whistleblower.
There are established practices of this nature
around the world. It is a system that is self
reinforcing in that rather than take the chance
of "the whistle being blown" compliance is
often voluntary. People in possession of luxury
cars and property with no income on a tax
form working for companies that are making
losses quickly have to make adjustments. The
current laws allow the tax authorities to go
back six years so income from 2009 to present
comes into play.
If executed properly and efficiently there
will be no non-energy deficit. There is likely
to be no budget deficit. This is also likely to
put a dent into illegal activity including white-
collar crime. Look forward to a reduction in
national security expenditure if it works.
As I have said repeatedly to the previous
administration starting from July 2010, sunlight
is the best disinfectant. Whistleblowing, cou-
pled with tax reform, is our easiest path to
reducing our budget woes. The question is:
do we have the political will?
Time to walk the walk.
Ian Narine can be contacted via email
BUSINESS GUARDIAN www.guardian.co.tt OCTOBER 8 • 2015
Time to walk the walk
Colm Imbert speaks with
Chaguanas East MP Fazil
Karim after the budget
presentation in Parliament
on Monday. Looking on is
PHOTO: ABRAHAM DIAZ
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