Finance Minister Colm Imbert said at yesterday’s Budget Presentation every one must share in the burden of adjustment if TT is to successfully overcome the difficult financial situation it now faces.
“We must all adjust, cut our cloth to suit our coat as the proverb says,” Imbert said as he unveiled the $50.5B 2018 Budget in the House of Representatives. Outlining several measures that spread the burden across the board, Imbert said, “We cannot continue to live on borrowed money or continue to run large budget deficits as has been the practice for the last eight years.”
He was confident that once the burden is shared, TT would be able to “meet any challenge the outside world throws at us” and the population would become “more productive and efficient.
MORE FOR FUEL
Motorists took the first blow with the prices of super gasoline and diesel being increased immediately from $3.58 to $3.97 per litre and $2.30 to $3.41 per litre, respectively. Reiterating that the fuel subsidy must be eliminated, Imbert said the wealthy man who drives a diesel BMW X5 receives the same subsidy as the working man who drives a Nissan pick-up.
He said that in 2014, the fuel subsidy was $7 billion and this, “is not a good or efficient use of taxpayers’ funds.” While tax waivers were made in the last Budget to promote the use of hybrid vehicles, Imbert said some people took advantage of this to import luxury vehicles. With 35,000 vehicles imported so far in 2017, Imbert said the importation of these vehicles, “has cost the country $500 million in forex in 2017 alone.”
As a result, he said motor vehicle tax and customs duty on private passenger vehicles with engine sizes above 1599 cc but less than 1999cc, will be increased by 25 percent from October 20. The increase in taxes imposed on vehicles with engine sizes over 1999cc remains in place. There will be a moratorium up to December 31 for private passenger vehicles already in transit or those already landed in TT.
He said removal of taxes and duties on hybrid passenger vehicles will be extended to CNG passenger vehicles, with engine sizes under 1599cc.
Motor vehicle inspection fees will be increased from $165 to $300 from December 1. Imbert said custom duty on all tyres will be 30 percent. However customs duty on tyres for buses and lorries remain at 15 percent. This measure takes effect on October 20.
ENERGY COMPANIES MUST PAY
Revealing TT is unlikely to get corporation tax from oil and gas companies, for the next seven years because of changes the People’s Partnership made to the oil and gas fiscal regime in 2013 and 2014, Imbert said this situation is untenable. He said a 12.5 percent royalty rate will be applied across the board on the extraction of all gas, condensate and oil.
To avoid further revenue leakage, Imbert said the fair market value for TT’s oil and gas for the computation of royalty will be fixed by the Petroleum Pricing Committee. The commercial banks were not spared as Imbert announced a new tax of 35 percent on their chargeable profits, effective January 1.
Stressing that wealthy corporations must also make sacrifices, Imbert said companies previously subjected to a 25 percent corporation tax will have that tax increased to 30 percent from January 1. Saying all private hospitals pay an annual license fee of $150, Imbert said medical or surgical hospitals, medical, surgical and maternity hospital or maternity hospitals will see their license fees increase from $25,000 to $50,000 to $100,000 per year.
These respective increases are linked to these types of institutions having less than 30 beds, between 30 to 60 beds and over 60 beds. Imbert said this measure does not apply to hospitals for the convalescent or chronically-ill, homes for the elderly or hospitals designated for the treatment of any designated illness or disease.
$50M FOR AUDITS
Highlighting a public appetite for government expenditure as cultivated under the PP, Imbert said this was particularly evident in the State Enterprises sector. To this end, he said $50 million has been allocated for special audits of state enterprises and governments in 2018. “This exercise will commence immediately,” he announced.
Imbert said Petrotrin’s burden is approximately $12B and this includes loans of US$850M and US$750M which will mature in 2019 and 2022, respectively. Imbert said Petrotrin and the Finance Ministry are currently discussing possible refinancing options with local and foreign financial institutions.
Imbert said despite its challenges and being overdue for fundamental restructuring, “Petrotrin still has great potential.” He said in the new fiscal year, an implementation team will be appointed to effect relevant recommendations made by a team appointed to review Petrotrin.
Noting the Regulated Industries Commission should complete a review of TT’s electricity and water rates next year, Imbert said TTEC and WASA cannot be subsidised at the levels they have been. He said TTEC owes the National Gas Company over $4 billion for the supply of natural gas for electricity generation.
He said WASA receives an annual subsidy of over $2 billion yet is still struggling, “to pay its bills on a daily basis.” Imbert said Petrotrin, TTEC and WASA together are causing over $3 billion to be diverted or lost every year. He said TT must ask whether it can afford to continue to support all three entities as they have been doing.
PAY TO GAMBLE
Imbert said similar questions must be asked with respect to GATE, URP and CEPEP. Noting Government’s efforts to restructure GATE, Imbert said the programme will be reviewed and adjusted if necessary in 2018. With reviews of URP and CEPEP in progress, Imbert said Government has engaged the World Bank to conduct a public expenditure review. He said one of the objectives of this exercise will be to improve the efficiency and targeting of these subsidies, “without depriving the deserving beneficiaries of these programmes.”
The gambling industry took several hits, starting with an increase on the duty on all mechanical games of chance from 20 to 40 percent, from October 20. Taxes on gaming tables and devices in private members clubs also increased. As an example, Imbert said roulette tables now attract a duty of $120,000 per year. These taxes take effect from January 1 and Imbert said they will be “strictly enforced.”
From December 1, there will be a ten percent tax on all cash winnings by the National Lotteries Control Board. Electronic roulette devices in bars throughout TT now attract a tax of $120,000 annually while the gaming tax under the Liquor License Act will be increased from $3,000 to $6,000 in respect of each amusement game. Speaker Bridgid Annisette-George cautioned Opposition MPs for thumping their desks as Imbert said Government was unable to implement the property tax this year. However Government MPs thumped their desks when Imbert countered, “We intend to have a properly implemented property tax system in 2018.