(Trinidad and Tobago Newsday, 7.Oct.2020) — Following the reading of the national budget for fiscal 2020/2021, the Trinidad and Tobago Chamber of Industry and Commerce acknowledges the unprecedented economic challenges which impacted its formulation.
With TT’s main revenue streams still dependent on gas and oil – commodities which are not enjoying high prices globally – the projected prices of US$45 per barrel for oil, and gas at US$3 per mmbtu, appears reasonable at this point.
The Finance Minister acknowledged the challenges faced by the gas value chain, and the need to become competitive. Long term sustainability of the sector will be dependent on how quickly the work being performed on the gas value chain is completed.
The positive adjustment to the supplemental petroleum tax (SPT) regime will have a significant impact on small producers, where we expect increased activity. We are also encouraged by the statement that the Petroleum Act will be reviewed. Hopefully this can be done sooner rather than later.
Overall, the push to start the energy transition is encouraging but greater focus must be placed on energy conservation and reducing wastage. With a proper plan, this could be done successfully and opportunities created for investment.
However, there are high expectations from non-energy sectors which feed into the projected revenue of $41.361 billion, and expenditure $49.573 billion with a fiscal deficit of $8.209 billion. In our opinion, not enough was done to close the deficit, and more details about the contribution from the non-energy sector should be shared.
We have consistently advocated for an enabling environment to develop our business sector, particularly manufacturing, as a crucial part of our foreign exchange earnings and diversification.
The continued digitalisation of government services will be critical to improve the efficiency and the ease of doing business.
We welcome the announcement of the electronic funds transfer window to pay taxes and customs duties online. We call on the Opposition to support the establishment of the TTRA, failing which priority must be placed on alternative mechanisms to widen the tax net. Specifically relating to property taxes, the chamber has continuously advocated for the six per cent tax to apply strictly to physical property and not on installed plant, machinery and equipment.
Although we recognise the need for social support for Tobago we are disappointed that our recommendation to repeal the Foreign Investment Tobago Land Acquisition Order was not accepted. This will continue to affect almost every facet of life of the island’s tourism-dependent economy. It particularly stymies construction and related employment, further hindering recovery efforts. Perhaps the effective implementation of the promised special government-guaranteed window in the commercial banks could still have a positive impact
On the other hand, we were pleased that our recommendation to increase the corporation tax holiday for SMEs which list on the SME Stock Exchange was accepted. This, along with the measure to allocate 20 per cent of government housing construction to SME contractors, is a positive step.
Measures to stimulate economic activity such as the incentives to drive activity in the construction sector and the increase in the personal tax allowance are positive steps, since they will provide more disposable income and create aggregate demand. The liberalisation of the retail fuel market and the privatisation of operations of the Port of Port of Spain are also progressive steps which will encourage more public-private partnerships and improve efficiencies.
Although more information is needed to evaluate the measures, we recognise steps had to be taken to dampen demand for foreign currency. Incentives to encourage local farming and consumption will, if implemented properly, have a positive effect.
The time is right for Government to play a more facilitative role for the business sector to put our country on a more sustainable path. The chamber now looks forward to the details which will emerge during the budget debate.