Death and taxes

NOTHING can be said to be certain except death and taxes, Benjamin Franklin said. And so, it seems, the good people of TT will soon discover.

As the pandemic death toll continued to rise, Finance Minister Colm Imbert on Thursday gave a clear signal that, in the current circumstances, implementation of long-promised tax measures is forthcoming.

“We are running a tight ship,” Mr Imbert said at the first Cabinet media briefing since the PNM’s return to office. “We committed in our manifesto to continue with the Revenue Authority and the property tax system…it is not a secret.”

Also not a secret is the fact that even considering the billions that might be raised, tax revenue is unlikely to staunch the gaping hole in our finances.

That it is unrealistic to expect this year’s budget to be balanced was also confirmed by Mr Imbert, who pointed to the deficit of $15 billion already sustained and the need to maintain expenditure on heads such as salaries, pensions and welfare payments.

But if Government cannot balance the books, it must nonetheless take pains to ensure it makes better use of the money it collects.

Here is the balance the State can, and must, get correct: tax increases have to be accompanied by bold measures to stamp out public-sector wastage, inefficiency and corruption.

For example, problems with the seabridge to Tobago need to be decisively ironed out, and incidents of gross wastage such as spending $70 million on medical facilities left unused there must be eliminated.

Regulatory bodies need to be bolstered. Just as longstanding as the proposals for property tax and the Revenue Authority is the seeming pipe dream of a new public procurement regime.

Mr Imbert gave his signals on the same day Cabinet announced direct “renegotiation” of a contract governing the inter-island ferry amid longstanding problems and concerns.

Meanwhile, in relation to the deficit, it is important to remember that a portion of spending is allocated not to pay for any goods or services but to simply service debt from previous years.

In ordinary times, economists would thus be correct to warn that over time deficits cost more, hindering a country from spending on what matters.

The irony is, Mr Imbert, in sticking to his guns on taxation, has nonetheless already made a notable concession to compassion by deeming salary expenditure mandatory.

But with so many complaints over bad service at public bodies, there is no reason why public-sector reform addressing inefficiency, low levels of productivity and poor morale cannot be introduced to help justify such spending.

In short, if it is about to raise taxes, the State must up its game.