NEW TAX COMING

FINANCE Minister Colm Imbert said the property tax will be used to earn state revenues as government tries to keep TT afloat during major financial fallout from the covid19 pandemic. He said TT’s economic state is not unique, pointing to oil-rich Dubai, which he claimed is on the brink of collapse.

At Thursday’s post-Cabinet briefing – the first since the PNM returned to governance after the August 10 general election – Imbert said this year’s budget deficit, exacerbated by the pandemic, stood at about $15 billion, although within a week or so he will get a final figure from his public servants.

“I had gone to Parliament twice to do amendments to the Heritage and Stabilisation Fund Act and also to give statements with respect to covid19 - what it was doing to our income, our balance of payments, our covid relief measures, etcetera. I had indicated then that the estimate at that time was in the vicinity of $15 billion.

“We had a significant reduction in tax revenue from March coming up. All forms of taxes – value-added tax (VAT), personal income tax, corporation tax, royalties because of the depressed oil prices, and so on.”

Asked if Government will initiate the property tax, following the Roadmap to Recovery Committee’s support for its implementation, Imbert replied, “I’m not sure what you’re referring to. I only saw the final document a couple of days ago in my inbox and I haven’t had the chance to go through it. I’m sure the details will be revealed in full course, what the Roadmap Committee is recommending. I wouldn’t want to comment on that at this stage.”

However, he was clear: “We had committed in our manifesto to continue with the Revenue Authority and the property tax system. That is there in black and white. We didn’t hide from anybody with that. We put it there that we were doing the valuations of properties and preparing the valuation rolls in order to allow the implementation of that particular tax. And also we were continuing our work on the Revenue Authority. So it is not a secret.”

DON'T EXPECT BALANCED BUDGET

With the lull in the economy, would people find it hard to pay property tax? Imbert did not directly reply but explained why he might not aim for a balanced budget.

“It’s a sort of a Catch-22, it’s a very complex situation. On one hand, commentators tell us we should balance the budget. So let’s say we had a $15 billion drop in revenue. Let’s say it was $35 billion instead of $47 or $48 billion.

“If we balance the budget, as some commentators are saying, we’d have to cut $15 billion from our expenditure profile. We are already running a pretty tight ship. We are already at a situation where we are not overspending.

“A lot of this is mandatory expenditure, for example, every month the mandatory expenditure in the Ministry of Finance – and I’m talking about salaries, senior citizens pensions, government pensions, social welfare payments like disability payments and public assistance etcetera, debt servicing and all other mandatory payments, before you get to things that are called discretionary which is goods and services and the capital programme – it’s $3.5 billion per month!”

“So we start off with a mandatory minimum, without any extra, of $42 billion for the year.
"So if we were to cut expenditure to $35 billion, you’d have to reduce some of those things I just mentioned there – old age pension, social assistance, salaries, debt-servicing and so on.

“So it’s very easy for people to say these things, eh. They don’t think it through. So we are in this Catch-22 situation where you have a huge drop in revenue.”

He said many countries were in a similar position including Dubai.

“We are told Dubai is about to collapse. It has no sustainable revenue base. Countries all over the world are struggling.

“So when you look at this situation we are faced with, you can’t just do what people are asking you to do. If you stop tax for example, you already have a $15 billion hole in your budget, and if you don’t collect tax, what does that do? Make it a $20 billion hole. Where is the $20 billion going to come from?

CAN’T PLEASE EVERYONE

“You have two groups of commentators, eh. One says cut expenditure to $35 billion, which means retrenching 20,000 people, stopping old age pension. That’s the effect of that. You just cut out everything. The country descends into chaos.

“One group is telling you that, then another group is saying, don’t borrow.

“A group of people is saying whatever you do, don’t borrow to meet your expenditure. Don’t withdraw from the Heritage and Stabilisation Fund to meet your expenditure. So how on earth is one supposed to deal with these two competing things?

“We have to be very, very careful about any reduction in tax collection, because what that does is, it prevents us from doing the very things that businesses need to survive, to keep the cost of goods and services at a reasonable rate and all that sort of thing. It’s easy to say but not easy to do. So at this point in time, I wouldn’t want to reveal anything.”

Asked if he had begun consulting Cabinet colleagues ahead of the October 5 budget, Imbert said that earlier, he had met Housing Minister Pennelope Beckles-Robinson to discuss plans to build public housing, ranging from $250,000 per unit up to $1.0-$1.5 million.

“Yes, I have been consulting ministers, new and old,” he confirmed.

Imbert earlier announced that on September 28, Government will hold its Spotlight on the Budget and Economy forum at the Hyatt Regency, Port of Spain. The event will feature an address by the Prime Minister plus a panel discussion with panellists from the public and private sectors.

He said his ministry is diligently going through all applications for the Salary Relief Grant payable to those who had to stop work during the covid19 lockdown. Alleging some applicants were guilty of double-dipping by applying to the Ministry of Finance and Ministry of Social Development for relief, he said the Government is considering what action to take, such as prosecution, yet he softened his tone to say some people were acting out of desperation.

Otherwise, Imbert said the final calculation of CL Financial’s indebtedness to the State now stood at $30 billion, up from previous calculations of $15 billion and then $23 billion. He said the CL Marine facility at Chaguaramas was valued at $100 million and could facilitate ship-repair as a key area of economic diversification away from oil and gas, while servicing government-owned vessels, such as ferries and military ships.