Imbert: Can't help without tax collection

Deferring taxes would be like cutting off your nose to spite your face, Finance Minister Colm Imbert said Monday, because that income is what will help fund the government’s social programmes to offset the economic impact of covid19.

“We have to give people help. Where is money supposed to come from? So, if we were to say yes, we will defer tax collection, (that) we will allow people not to pay taxes, where is the money going to come from to produce the salary relief grant and other assistance?

"We can’t defer. It’s unfortunate so that’s just how it is. We need every single cent,” Imbert said during a virtual media conference.

Imbert gave an update on the country’s finances. For the second quarter, up to March 30, the government has, to date, collected $3.6 billion, a shortfall of about $600 million to $700 million from the original projection but which Imbert insisted was well within the ministry’s projections following a recalibration of the country’s budget after the collapse of oil and gas prices last month.

The new estimates put the budget deficit somewhere in the vicinity of $11 billion to $12 billion, a big jump from the $5 billion originally projected in October. This month, the shortfall was about $600 million to $700 million. Unanticipated expenditure, including the covid19 social security net and outstanding tax refunds to businesses, will be another $2 billion.

“We will have to go borrow that or draw from the Heritage and Stabilisation Fund to make that up, to maintain original expenditure targets. And then we have new expenditure coming in… So we have to collect as much tax as we can.

"I’ve heard this request but it does not rally make any sense in terms of context of asking the government to help. The only way the government can help is by collecting as much tax as it possibly can." This month, the government collected $450.4 million in VAT and $188 million in import duty.

Imbert said there was a significant decline in energy sector income – roughly 80 per cent. There were drops in petroleum profit taxes, a $300 million decline in corporation tax and another $300 million decline in royalties from upstream energy companies.

“As we go forward into the next quarter you will have the impact of slowdown in business affecting other companies, those outside oil sector.

"In addition, obviously we benefited in March from good returns in January and February; March obviously not so good, and April won’t be good at all and May for that matter.

"When we get our next collection (next quarter) we will get a much clearer picture of what this global situation is.”

There is some relief, though, from international sources.

Imbert said the government had been offered and applied for assistance from resources the World Bank (US$20 million); the Development Bank of Latin America (US$50 million plus another US$250 million loan approved for general construction programmes); and US$100 million from the Inter-American Development Bank (IDB).

The IDB will also allow the country to reallocate unutilised resources from other loans, giving another US$30 million in wiggle room.

“We are on target to access about US$450 million from multi-lateral agencies, or in excess of TT$3 billion,” Imbert said.