PORT OF SPAIN, Trinidad – Finance Minister Colm Imbert Monday presented a budget of TT$59.7billion to Parliament indicating that the government had taken a “deliberate decision not to increase or reduce any existing taxes”.
Finance Minister Colm Imbert delivering 2024-25 national budget to ParliamentIn a presentation lasting almost five and a half hours, Imbert said that the Keith Rowley administration had decided any any new tax measure “other than some positive adjustments to the tax regime in the energy sector to stimulate exploration and production, among a few other minor adjustments”.
He said the fiscal measures will focus on improving the well-being of every individual in the society so that they can reach their full potential, adding “we are investing in our people”.
Imbert, who has been finance minister since the ruling People’s National Movement (PNM) came to power in 2015, and is expected to face the electorate by August next year, said total expenditure has been pegged at TT$59.2 billion, with revenue at just over TT54 billion, resulting in a fiscal deficit of TT$5.197 billion
He told legislators that the fiscal deficit is estimated at 2.7 per cent of gross domestic product (GDP) and that it is within the international benchmark of three per cent.
Imbert said that the government has long recognised that the changing dynamics of global energy markets with associated shifts in demand and supply balances for oil and gas generally create public policy dilemmas in the context of oil and gas revenue volatility.
He said the matter had been an issue since the early 1970’s and that economic transformation and diversified growth have been features of the national economic planning as we seek to expand the non-energy sector
“We consistently review oil and gas prices in global energy markets to ensure that under normal conditions our energy revenue estimates remain reliable to allow us to provide some of the capital and knowhow for supporting diversified growth and maintaining the sustainability of our social network.
“Reliable assumptions for oil and gas prices are central to our budget formulation process, and international organisations provide us with in-depth analyses and forecasts,” Imbert said noting that the fisccal package is predicated on the presumption that oil price will be US$85 per barrel, compared with US$92.50 per barrel in 2023, and natural gas price will be five US dollars per MMBtu, compared with six dollars per MMBtu in 2023.
“I am confident that the estimates under this budget framework would materialise and ensure that the economic recovery is anchored on sound and stable macroeconomic conditions. Indeed, as the recovery consolidates, we expect the non-energy sector to expand and advance the diversification agenda.”
He said that he proposes to initiate action to minimise the country’s socio-economic imbalance and stimulate consumer spending aimed at economic expansion.
“To achieve this objective, I propose to increase the minimum wage by 17 pe rcent, or three TT dollars per hour, from TT$17.50 to TT$20.50 per hour,” Imbert said, noting that this measure will benefit approximately 190,000 persons in the workforce and will take effect from January 1, next year.
In addition, the government said it is extending by three years the Tourism Accommodation Upgrade Project (TAUP) incentive, which was due to expire on September 30, 2023.
“This facility provides a reimbursable grant to eligible tourism accommodation facilities. Madam Speaker, this measure will be reinstated from November 1, 2023 for another three years.”
Imbert said export sales facilitate international trade and stimulate domestic economic activity by creating employment, production, and revenues.
“In this highly globalised and competitive environment within which businesses operate, I propose to exempt from business levy manufacturing companies whose gross receipts fall within the 30 per cent tax bracket from business levy charges regarding only export sales.
“This measure aims to create a competitive advantage for local manufacturing businesses to engage in exports,” he said, adding that this initiative will take effect from January 1, next year at an estimated tax loss of TT$20 million.
The government is also proposing to increase the Sustainability Incentive from 20 to 25 per cent with respect to the rate of supplemental petroleum tax for any mature marine or small marine oil fields.
Imbert said that this will encourage smaller oil producers and lease operators in small and mature marine oil fields to incentivise further their production.
He said he is also proposing to introduce adjustments to the SPT regime for the shallow water areas, similar to what has implemented for small onshore producers, introducing a new threshold of TT$75 per barrel for SPT for small shallow water producers.
“Where feasible, we will also make suitable adjustments to the capital expenditure allowances for small shallow water producers,” he said, adding that the measures will take place from January 1, next year.
He said with regards to the rapid advancement of technology and the growth of the digital economy, the increasing threat of cyber-attacks means that more secured and concerted effort are required to protect sensitive information from being penetrated.
He said to aid in reducing this risk, the government is proposing to introduce a Cybersecurity Investment Tax Allowance of up to TT$500,000 for companies which incur expenditure in respect of investments in cybersecurity software and network security monitoring equipment. To qualify for this allowance, the expenditure must be certified by iGovTT.
Imbert said that this measure is envisioned to incentivise companies to invest in cybersecurity for two years from January 1, 2024 to December 31, 2025, and will result in an estimated tax loss of eight million dollars.
Imbet told Parliament that over the years, there has been legislative ambiguity with respect to the treatment of expenditures claimed against exempt income.
He said from a tax administration perspective, since the income is already exempt from taxation, any expenditure incurred towards earning such income should not be allowed as a deduction since it reduces the tax on the non-exempt income.
“I propose to amend the tax legislation to address this issue by disallowing expenditures incurred in earning exempt income, subject to specific provisions of the tax law stating otherwise.
“This initiative will protect the tax base in Trinidad and Tobago, harmonise the law, and bring us into alignment with standard practice in jurisdictions worldwide,” he said, adding that this measure is anticipated to yield approximately TT$75 million in tax savings and will take effect on January 1, next year.
Imbert said with regards to the education sector, the government is proposing to introduce a 150 per cent tax allowance of up to TT$500,000 on corporate sponsorship to public and private schools registered with the Ministry of Education.
“It is envisioned that this measure will encourage the enhancement of these schools to ensure that access to and delivery of education are promoted,” he said of the measure that goes into effect at the start of the new year.
Imbert said while the government has taken “a deliberate decision not to increase or reduce any existing taxes,” in this year “we did not feel that we should impose any further burdens on our citizens, but rather, we should provide some relief in key areas to those at the lower end of the scale”.
He said the government has provided one billion dollars in backpay for those 37,000 public sector workers who have accepted the offer of a four per cent wage increase plus increases in some allowances
“We shall also bring all those public sector workers up to their new salary levels immediately at a cost of an additional TT$360 million per year. We are also exempting the one-off payment of TT$4,000 to retirees from tax, which forms part of this process.”
Imbert said that the government is also giving the 37,000 public sector workers an undertaking that all ministries and agencies involved will be provided with the necessary funds to pay the one billion dollars in backpay by Christmas, adding “I am requesting all permanent secretaries and accounting officers by way of this budget statement to immediately start preparing the paperwork to achieve this deadline for these payments.
Imbert said to help needy families, the government will provide a school supplies and book grant of TT$1,000, based on a means test, benefitting an estimated 65,000 children.
“ We have also budgeted for an ambitious capital expenditure programme of TT$6.2 billion to stimulate economic growth further. All Ministers will be required in 2024 to do whatever is necessary to fully accomplish our planned Public Sector Investment Programme for this fiscal year.”
During the presentation, which sounded more like a manifesto ahead of the general election, Imbert said the government is introducing a number of programmes designed to help the less fortunate, such as adult literacy and financial literacy, as well as a number of stimulus programmes and support structures designed to boost the diversification of the economy and to assist small and medium enterprises, who are the backbone of our productive sector
“Most importantly… we will focus on assisting the police and other law enforcement agencies to combat and control crime.”
He said that the substantial additional budgetary allocations for vehicles and equipment, inshore vessels, community patrols, the proposed huge recruitment drive to boost the numbers of active police officers and other tangible support for the police are testimony to this. “Further, if more funding is required to assist the Police to achieve its objectives, it will be provided in the mid-year review or before,” Imbert told legislators.
Debate on the budget will begin on Friday.
