AMCHAM T&T’s POST BUDGET FORUM
HYATT REGENCY TRINIDAD
TUESDAY 4TH OCTOBER, 2016
Remarks by: Ravi Suryadevara, President AMCHAM T&T
Good Morning ladies and gentleman.
Over the years AMCHAM T&T has been at the forefront of a range of business, economic and social issues that have been not only important to our membership but the country at large. Events such as these, in our view, are a medium for the exchange of critical information and a forum for the business community to share their views on government policy. As the Pathway to the Americas, AMCHAM T&T’s perspective on national events is formulated through the constant engagement and interaction with our membership and with our twenty-three sister AMCHAMs throughout Latin America and the Caribbean and business leaders throughout this hemisphere.
Admittedly, when the budget was delivered in Parliament, I was on route from Washington D.C. where some members of the AMCHAM T&T executive and myself were engaging with our sister AMCHAMs in our annual Outlook on the Caribbean and Latin America meeting. It was there we continued to engage with the world’s largest business federation, the U.S. Chamber of Commerce, and other senior policy makers from governments in our hemisphere. These meetings enable us to hear directly from world leaders as the words “recession, fiscal adjustment and even austerity” have become a global occurrence as countries all over the world deal with the shocks and pains of economic change.
Every year, AMCHAM T&T submits budget recommendations to the Ministry of Finance, and this year was no different. We commend the Government for paying heed to some of our recommendations to boost investment facilitation and raising revenue through the sale of shares in state enterprises.
We understand that there is still need to stabilize the economy, given the on-going pressures in the global environment. However, we must remain mindful that stabilization without transformation will only lead us down an already known path where there is no meaningful growth or development of the country’s economy in the long term.
Some of positive initiatives that have been articulated in this year’s budget are:
We agree with the Minister when he stated that “it cannot be business as usual.” We therefore expect consultation, early and meaningfully, as the country should not enact legislation which goes so far that it acts as a disincentive for investment and economic activity in the aforementioned points. This becomes especially important to the re-introduction of Property Tax via the 2009 Act and its stipulation for industrial classifications. While the projected revenue is in keeping with past collections levels of property tax, we await review of the amendments for certainty in this matter. To repeat AMCHAM T&T awaits details on amendments and valuations for the property tax. We maintain that uncovered plants, rigs and machinery not be included in the value of industrial property, as this would present a challenge to existing companies and future investors. This is also pertinent in the overall area of taxation, be it property tax or transfer pricing or the on-line tax, as we seek to encourage trade and export and more of our local companies are themselves seeking to become multinationals.
AMCHAM T&T is however disappointed that the Minister announced the online tax without consultation as he committed to discussing with AMCHAM T&T and other stakeholders prior to the budget. AMCHAM T&T does not support this tax, as we believe that this tax would not assist the Government by means of addressing foreign exchange demand nor raise material revenue, but rather it can be unnecessarily inflationary, as many businesses use online shopping for raw materials and machinery. Fresh produce and medication are brought into this country via air freight daily. We await further details on this initiative.
Our recommendations focused on measures to enhance business, stimulate trade and investment. We also underscored the importance of curtailing expenditure while simultaneously addressing the challenges faced in revenue collection. In this regard, we do not think the Government did enough to reduce expenditure. The reduction in Transfers and Subsidies, particularly restructuring the URP and CEPEP programs has long been advocated for by AMCHAM T&T, not only by way of its financial footprint by also the counter-productive effect subvention labour programmes has on the workforce. While there have been successive announcements of returning these programs to their policy moorings, AMCHAM T&T is concerned that sufficient action has not been taken to give effect to reducing these expenditures to sustainable levels.
It is also important to note that some of our major contracts with the multinationals in the oil and gas sector come up within the next two to three years. We must continue to monitor, as these will no doubt affect our revenue generation through taxes and employment as well. The delicate balance of inward domestic focus versus outward international attractiveness must be maintained as the government proceeds to realize new sources of revenue and extract greater value from international operators.
Again, as in the 2016 Budget, it seems that the Government will receive a bulk of non-gas revenue from taxes. Efficient tax collection remains an issue. Without specific and proven systems in place, revenue generation will be but a mere wish that is never truly actualized. In this vein, we continue to support the implementation of the Revenue Authority, however once again we lack the details on how the Government plans to make this a viable entity. This we believe is crucial in realising the revenue potential proposed in the national budget. This allows for a chance at expanding the formal economy and adding operators into the tax base. Increasing tax measures on known operators with no plans identified for increasing the efficacy of the tax system and widening the base is an over burden on known operators. A well-staffed and efficient Revenue Authority can now operationalise and prioritize polices for identifying and collecting tax from unregistered businesses.
While AMCHAM T&T commends the review of the Petroleum tax regime inclusive of the Supplemental Petroleum Tax (SPT), we are however disappointed in the introduction of the 30 percent increase in Corporation Tax on chargeable profit of one million dollars. The increase in this tax would hamper the Government’s thrust of developing entrepreneurial activity. In addition, the higher effective tax rate will act as a disincentive to new investments, particularly in the non-energy sectors. This is an additional burden coming on the heels of the increases of the Business and Green Fund Levy and the online tax.
Many of these measures require important legislation to be passed in parliament. We need the country’s leaders to be cognizant of the importance of consultation with all stakeholders before it is taken and the importance of collaboration between the Government and the Opposition. Disruptive cognition is vastly different from cognitive disruption. Leaders will do well to take heed of this as a guide in the challenging times ahead.
In closing, on behalf of my fellow Officers and the entire Board, I wanted to thank the AMCHAM T&T Secretariat staff and the Budget sub-committee for their efforts in our various engagements in the budget process. To our sponsors, my gratitude for your support and recognition of the value we provide for you and our esteemed members.
Once again I thank you for attending AMCHAM T&T’s Post Budget Forum and I thank you for your privilege of your attention.
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