Home' Trinidad and Tobago Guardian : March 2nd 2017 Contents MARCH 2 • 2017 guardian.co.tt BUSINESS GUARDIAN
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BG VIEW ANTHONY WILSON
Chief editor business
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With the long Carnival
season over and the
heavy lifting with re-
gard to the passage of
the Tax Information
ments Bill in the Lower House completed,
Minister of Finance, Colm Imbert, will no
doubt be turning his full attention to the mid-
year budget review, which---based on his de-
livery last year---is due in just over one month.
Here are some of the issues that the minister
is expected to address:
An update on the
country's fiscal position
This is the most important aspect of the
mid-year budget review and the one that the
population would be most anxious about,
given the possibility that Mr Imbert may be
forced by the economic circumstances to an-
nounce further fiscal consolidation, which is
just another way of referring to increases in
taxes and cuts in expenditure.
In delivering the 2017 budget speech, Mr
Imbert announced that for the period October
1, 2016 to September 30, 2017, he expected that
the local economy would generate revenues
of $47.4 billion and the central government
would spend a total $53.47 billion.
Of the $47.4 billion the Minister of Finance
predicted he would collect during the 2017
fiscal year, it is noteworthy that only $37.75
billion (79.6 per cent) is projected to come
from taxation, which is referred to as recurrent
revenue. One-fifth of the 2017 revenue---some
$9.69 billion---is projected to come from one-
off measures, also called capital revenue.
Also of interest is the fact that revenue from
the energy sector is only expected to generate
$2.57 billion in the 2017 fiscal year.
This means the sector that once provided
the most money for the government's coffers
is projected to contribute only 5.42 per cent
of total revenue and 6.8 per cent of recurrent
If over 90 per cent of the total taxation rev-
enue of $37.75 billion for the 2017 fiscal year is
expected to come from the non-energy sector,
what are the prospects that the government
will collect $35.18 billion in taxes from what
has been described as the onshore sector?
My own view is that the prospects of the
current administration collecting over $35
billion in taxes from the non-energy sector
That is partly because a declining economy
generates less taxation revenue than an econ-
omy that is either stable or growing.
The Central Bank's data centre reveals that
the T&T economy declined by 5.3 per cent in
the first quarter of 2016 and by 8.2 per cent
in the second quarter.
According to the information memorandum
issued in January 2017 for the $1 billion bond:
"For the period October-November 2016, oil
and gas output were 7.5 per cent and 10.5 per
cent lower, respectively than in the corre-
sponding months of 2015."
Further, domestic sales of cement were
24 per cent lower in December 2016 than in
January 2016 and the number of new private
motor vehicles sold in 2016 was 10 per cent
less than in 2015.
The slowdown in sales, which affects VAT
receipts and other taxes, is borne out by the
Central Bank's January Monetary Police An-
nouncement, which stated: "Latest available
data on retail sales, cement sales and produc-
tion of mined aggregates---such as gravel and
sand---suggest that the distribution and con-
struction sectors remain very subdued."
Mr Imbert is also unlikely to collect $35.18
billion in tax revenue because the institutional
framework for improving tax collection has
not been implemented.
Specifically, the minister has not yet been
successful in completing the legislative re-
quirements for the establishment of a Revenue
Of the Revenue Authority, the minister said
in the 2016 budget, the government was "mov-
ing full speed ahead" and that it expected "to
introduce legislation for the establishment of
a Revenue Authority in Parliament in the sec-
ond quarter of fiscal 2017" which is the end
of this month.
In his 2017 budget presentation, Mr Im-
bert said: "The Revenue Authority will allow
greater transfer of information between the
Board of Inland Revenue and the Customs
which is needed to reduce the incidence of
Also in the 2017 budget: "There was a size-
able shortfall in value-added tax collections,
compared with the projections made at the
time of 2016 budget. The analysis by the Min-
istry of Finance suggests that apart from the
downturn in the economy, tax evasion re-
lated to value-added taxes continues to be a
In other words, businessmen and others in
this country are not remitting to the govern-
ment the taxes that it is owed and there is not
much the government can do about it...except,
perhaps, announce yet another tax amnesty.
In the 2017 budget, the minister boldly
stated that property taxes "will be fully im-
plemented in 2017 based on The Property Tax
Act 2009, with minor amendments to the
Valuation of Land Act."
He said: "New tax invoices will be issued
in 2017, subsequent to the completion of the
valuation roll prepared by the Commissioner
of Valuations and the assessment roll prepared
by the Inland Revenue Division."
But in the 2016 budget, the same minister
had said: "We will take steps to amend certain
legislative provisions, including the determi-
nation 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."
Not for a want of effort, but Mr Imbert was
not successful in implementing the property
tax regime during the 2016 fiscal year and, if I
were a betting man, I would not wager one pink
note on the ministry being able to implement
the property tax regime in the 2017 fiscal year.
Casinos are one of the easiest and poten-
tially one of the most fruitful taxes that the
government has in its fiscal arsenal.
And while Mr Imbert tabled the Gambling
(Gaming and Betting) Control Bill, in Parlia-
ment in January, there is no doubt that the
casino lobby is going to oppose, with some
vigour, the attempt by the government to
regulate and tax the industry, which is one
of the few in this country's non-energy sector
that is growing.
In the 2017 budget presentation, the min-
ister stressed that the casino legislation was
identical to the one that was previously tabled.
Interestingly, he also said: "I have now ben-
efitted from wide-ranging consultations with
key stakeholders in the national community.
We cannot afford the expansion of an industry
which remains largely illegal and unregulat-
ed with associated negative social effects, in
particular on our young and vulnerable in our
The minister also cited a report from one
of the leading consulting firms in the casi-
no industry, which concluded: "The gaming
market in T&T has rapidly emerged and, in
recent years, has experienced uncontrolla-
ble growth. The result has been a very large
diverse industry whose lack of regulation and
oversight was virtually unprecedented.
"In fact, no other gaming market in Latin
America operates with as little supervision
and oversight as do Private Members Clubs
(PMCs) and amusement machine gaming
operators in T&T."
Despite the inherent reputational dangers,
not to mention the fiscal hole of such a situa-
tion, why has the casino legislation not been
On to the mid-year
With regard to the one-off measures, the
Minister of Finance expects to collect $4.1
billion from the sale of assets comprising:
• $1.5 billion from the sale of the National
Gas Company’s residual 51 per cent stake
• $1.5 billion from the sale by the govern-
ment of an additional 20 per cent stake
in First Citizens Holdings Ltd, which is
the majority owner of First Citizens. The
banking group has over 5,000 local in-
dividual and institutional shareholders,
following its Initial Public Offering in 2013.
While there was a notice in the news-
paper last weekend in which the First
Citizens board approved the disposal of
the 48 million shares by the government,
there is still no timetable or schedule for
the proposed 2017 divestments, which
are essential for planning by potential
COLM IMBERT, Minister of Finance
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