The trinidad Guardian / This country’s declining revenue has been a bugbear of sorts for Colm Imbert since assuming office as Finance Minister just over two years ago.
Yesterday officially marked the end of fiscal year 2016/2017 and as such the Sunday Business Guardian can analyse exactly how successful Imbert has been in implementing some of the measures announced in last year’s national budget to tackle this issue of falling revenue.
On Wednesday at the “Spotlight on Trinidad and Tobago’s Financial Circumstances: The Road Ahead” forum Prime Minister Dr Keith Rowley stated that the government was faced with a fall of more than 89 per cent in its main revenue source between 2014 and 2017.
“The revenue situation facing us in 2018 remains a very challenging one and the government will be taking steps necessary to ensure that it will be tightening its revenue collection mechanism,” Rowley said.
“The country, out of necessity should remain open to any and all suggestions to boost revenue levels,” he said.
Trinidad and Tobago has traditionally counted on revenue from oil and gas as its main source of income.
However since October 2016 oil prices have traded in a US$10 band between US$45 and US$55 per barrel.
The oil price on Friday traded at was just over US $51.
The loss of revenue generation in this country was one of the things, that Imbert hoped to tackle in the 2016/2017 fiscal year.
In light of this, Imbert proposed the implementation of a Property Tax regime with the hopes of raising at least $600 million in revenue.
But litigation brought by former People’s Partnership Government Minister Devant Maharaj and other hiccups stalled the government’s attempts at implementing this legislation.
The graduation of some 187 from a six-week Valuation Assessors Training Programme in August however has signalled the government’s intention to continue pursuing the matter in the new fiscal year.
In delivering the 2016/2017 budget Imbert said that the “weakening of energy tax collections and the need to boost domestic tax collections” had “exposed the weakness of our tax administration system”.
In order to tackle this weakness Imbert said as an “urgent priority in 2017” there would be the introduction of an Integrated Revenue Authority to help stem the “considerable tax leakage in Trinidad and Tobago and the Board of Inland Revenue”.
“Because of the obvious leakages of tax revenue, we plan to complete the legislative requirements and establish the Revenue Authority in fiscal year 2016/2017, having already strengthened the administrative processes at the Board of Inland Revenue and the Customs and Excise Division at the Ministry of Finance,” Imbert said.
“With a broad level of autonomy, the Revenue Authority would maximise tax collection in Trinidad and Tobago. As indicated previously, however, this will require the support of the Opposition, since the enabling legislation requires a 3/5 majority vote in Parliament, and once the Revenue Authority Bill it is laid, it is our intention to send the legislation to a Joint Select Committee of Parliament so that we can benefit from the views of all stakeholders,” he said.
The Revenue Authority was not established in fiscal year 2016/2017 however Minister in the Ministry of Finance Allyson West on Friday said she was confident the process of compliance with the Revenue Authority will be implemented later this year.
West said it was alarming that scores of people have evaded paying taxes for years in this country.
The move for the establishment of the TTRA has since been met with protests by public servants because of what they fear would be the loss of jobs.
It is left to be seen exactly how the Government will deal with this backlash.
In the face of falling revenue one of the things the Government has used over the past two fiscal years to buffer the country’s economic position has been withdrawals from the Heritage and Stabilisation Fund.
The first draw-down of US$375.05 million was made on May 13, 2016.
While a second draw-down of US$251 million was made a little less that a year later on March 16, 2017.
As of March 16, 2017 the balance of the Heritage and Stabilisation Fund was US$5.44 billion.
In last year’s budget presentation Imbert signalled at the separation of the HSF into a Heritage Fund and a Stabilisation Fund in fiscal 2016/2017.
The Heritage and Stabilisation Fund Act of 2007, called for a review of the legislation after five years but this was not done when the five year period ended in 2012.
Imbert said based on a forum hosted by the Finance Ministry last year and attended by stakeholders a draft position paper was being prepared, “as a basis for public consultations, with a target of presenting a revised bill to Parliament” in fiscal 2016/2017.
“The draft Bill will provide for the separation of the HSF into Heritage and Stabilisation Funds, each with its own rules with the design of the latter being informed by the Medium Term Fiscal Consolidation Plan. The Bill will also address the need to increase the rate of savings into the new Heritage Fund, taking into consideration the implications of energy revenue transfers for fiscal adjustment,” Imbert said.
This however was not done for fiscal 2016/2017.
So as Imbert prepares to read the budget tomorrow we wait to see how he treats with these issues.