Kamla waves document: Proof of higher taxes here

OPPOSITION Leader Kamla Persad-Bissessar says she has evidence of the government’s plans to increase revenue at taxpayers’ expense, including a proposal to raise VAT from 12.5 to 15 per cent.

Persad-Bissessar, armed with a document she claimed was a cabinet note at a UNC rally in Barrackpore on Monday night, accused the Prime Minister of misleading the public in Parliament on June 7, when he denied the government plans to impose punitive measures to raise revenue.

The government is seeking a $2.3 billion supplement to fund urgent critical and recurrent capital expenditure.

Dr Rowley denied any proposal to increase VAT.

“I can tell you without fear of contradiction, nowhere in the corridors of this government that I lead is VAT increase a discussion. Nowhere," he said.

Persad-Bissessar, however, claimed she had evidence of a multi-billion-dollar government scheme to increase revenue and cut expenditure, included in an alleged cabinet note dated May 21.

On June 10, she challenged the PM’s denial and asserted the document’s authenticity.

“I do not engage in fraud or (providing) false documents," she said. "Remember the fake e-mails in Parliament?”

The document read, “Notwithstanding the need to increase FY24’s expenditure…to ensure delivery of the aforementioned essential services to the citizens of TT, government is mindful of the possible effect of such disbursement, and its impact on the economy. As such, additional appropriate measures will be taken to ensure…no divergence from its existing prudent financial management. As a consequence, further revenue-generating measures are under consideration and may be instituted at a later date.”

Additionally, the government is seeking to increase its overdraft facility at the Central Bank from 20 per cent to 25 per cent of annual revenue.

According to the document in Persad-Bissessar’s possession, an adjustment to VAT would account for one of the most significant measures to raise revenue.

The document allegedly states, “For every one per cent increase in VAT, $560 million VAT revenue is estimated to be earned…An increase in the VAT rate to 15 per cent can result in (an additional) $1.4 billion in revenue earned annually once properly administered.”

The other measures reportedly include a new tax bracket for high-income earners; new tax brackets for commercial banks; introduction of a tiered taxation system (corporation tax, petrochemical companies); presumptive taxation; tax amnesty; revised penalties to ensure compliance with the Board of Inland Revenue; tax administration (recruit 100 short-term collection officers; a series of compliance exercises to generate immediate tax revenue.

Additionally, the document was said to read, “For every one per cent increase in the income tax rate, $240 million in revenue is estimated to be mobilised annually.

“For every one per cent increase in corporation tax, $260 million in revenue will come in per year.”

The business levy is 0.6 per cent of sales/revenue and an increase of 0.1 per cent could result in an additional $100 million in revenue.

Persad-Bissessar said electricity rates would increase after the Regulated Industries Commission (RIC) adjusted the tariff rate, but the estimated revenues were unknown.

Persad-Bissessar anticipated the Government would respond to her claims the next day.

Imbert indeed responded to Persad-Bissessar as he opened debate on the Finance (Supplementary Appropriation) (Financial Year 2024) Bill, 2024 in the Senate on June 11, denying the document in Persad-Bissessar's possession was a cabinet note but instead a working paper presented to the Minister of Finance.

He said, "The document that was available to the media had calculations of how much revenue you would lose if you reduce VAT by one per cent and how much revenue you would earn if you increase VAT by one per cent; how much revenue you would lose if you reduce personal income tax by one per cent; how much revenue you would earn if you increase personal income tax by one per cent."

Imbert said a careful analysis of the document Persad-Bissessar quoted on Monday would show there was "no decision and no recommendation to the Cabinet."