Chamber praises fuel market liberalisation, port privatisation

THE TT Chamber of Industry and Commerce has praised the liberalisation of the retail fuel market and the privatisation of operations of the Port of Port of Spain as progressive steps towards more public-private partnerships as this will improve efficiencies.

But it expressed disappointment at the lack of measures to speed up VAT refunds.

The chamber, in a release on Monday, said the budget is based on the oil price of US$45/barrel and gas price of US$3 per mmbtu, which appeared reasonable at this point.

"While the minister has projected revenue estimated at $41.361 billion, and expenditure $49.573 billion with a fiscal deficit of $8.209 billion for fiscal year 2021, we believe more detail is required with regards to the income from non-energy as it appears high. We also would have liked to see more effort towards tightening government expenditure to reduce the deficit."

The chamber thanked the Finance Minister for adopting some of the recommendations in its submission earlier this year. It commended the positive adjustment to the Supplemental Petroleum Tax regime, saying it will have a significant impact on small producers, where it 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."

The Chamber described government’s push to start the energy transition as encouraging.

"However, greater focus must be made on energy conservation and reducing wastage. We encourage the Government to lay out a clear long-term plan for the energy transition, which if successfully done, will create opportunities for investment. In particular, we look forward to the continued digitalisation of government services to improve the ease of doing business and efficiency in the judicial system through virtual courts."

However, the chamber was disappointedthat more was not done to address VAT and tax refunds, such as introducing net offs and a separate ring-fenced fund (which had been mentioned in the election manifesto). It noted the minister mentioned that a second tranche of VAT bonds will be issued but it awaited the details on timelines and value.

"The current VAT and tax refunds situation must be made current; otherwise it will continue to have a debilitating effect on businesses."

The chamber said it welcomed 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 (TT Revenue Authority), failing which priority must be placed on alternative mechanisms to widen the tax net."

On property taxes, the chamber said it had continuously advocated for the six per cent tax to apply strictly to physical property and not installed plant, machinery and equipment.

"It is counterintuitive to implement measures to encourage manufacturing activity while taxing machinery and equipment used in factories."

But it was happy to see the action taken to develop the agriculture and agro-processing sectors. as the $4 billion food import bill is unsustainable.

"We are heartened to hear that for the next five years the highest level of priority will be given to improving TT’s food security by providing the appropriate funding and addressing the institutional challenges faced by the sector."

The chamber recognised the need to implement social support for Tobago, which has been hard-hit, but regretted that its recommendation to repeal the Foreign Investment Tobago Land Acquisition Order was not done, as this will continue to stymie construction, employment generation and hinder economic growth on the island.

The chamber recognised steps had to be taken to dampen demand for foreign currency, but wanted more information to evaluate the measures.

It was pleased its recommendation to increase the corporation tax holiday for SMEs which list on SME Stock Exchange was accepted.

"We believe this, along with the measure to allocate 20 per cent of government housing construction to SME contractors, is a positive step. We welcome measures to stimulate economic activity such as the incentives to drive activity in the construction sector and the increase in the personal tax allowance which will provide more disposable income and create aggregate demand.

"We believe the Government has done their best to act prudently, given the challenges they are working with. The TT Chamber now looks forward to the details of all the measures which will emerge during the budget debate."