Millionaires will face a new 30 percent tax rate, although their yachts will be VATfree.
Consumers of booze and tobacco are likely to have a bad hangover, with import duties going up by 15 and 20 percent respectively.
At the pump, users of diesel fuel will have higher prices, paying 15 percent more. The new price of diesel fuel will be $2.30 per litre, up from $1.98 per litre. And online shoppers will not get a reprieve from the 7 per cent internet shopping levy.
At the same, 120,000 households with electricity bills of $300 or less will receive a 25 percent rebate. And talented entrepreneurs will get a $1 million grant, presumably exempt from the new millionaire tax which applies to persons with incomes of $1 million or more per year. In a three-hour presentation, Finance Minister Colm Imbert unveiled a $53.4 billion Budget pegged on an oil price of US$48 per barrel and which will see a fiscal deficit of $6 billion or 3.9 per cent of GDP.
The Minister sought to balance measures affecting the ordinary man with measures affecting the rich in order to place emphasis on the need for all sectors of the society to shoulder the burden of the economic downturn. “It is imperative that we spread the burden of adjustment across the society,” Imbert said. “The burden cannot fall on just one group alone. The time is thus opportune to widen and deepen the tax net within Trinidad and Tobago.” The measure will be introduced on January 1. About $560 million more will be gained by the measure.
PAY MORE FOR BOOZE In relation to booze and tobacco, the Minister noted the costs to society of health problems related to them.
“The Government is of the view that we need to curb the consumption of alcohol and tobacco,” Imbert said. “In Trinidad and Tobago, it costs the Government $500,000 per year to treat just one lung cancer patient. For far too long, we have had to deal with the negative consequences associated with the high consumption of these products.” The new duties will apply to products manufactured locally and internationally, including those sourced from the Common Market.
Additionally, the Customs and Excise Division will crackdown on increased levels of smuggling and the growing black market trade in these items. Diesel will now be 75 percent the market rate, in line with the gradual removal of the fuel subsidy. Those hoping the internet levy would be put on hold had their hopes dashed. The charge will apply to purchases that arrive in Trinidad and Tobago through the courier companies or are brought in directly by individuals via air freight. The tax will be due and payable at the bonded warehouses before clearance of goods or directly to customs in the same way that VAT and customs duty are currently collected, the Minister said. Estimating the overall online trade as $1 billion, Imbert said the charge would net $70 million annually.
But these measures alone are not meant to plug what Imbert described as a “fiscal gap” of $16 billion in terms of core revenue. In a sign further withdrawals from the Heritage and Stabilisation Fund are planned, the Minister said the gap would be, “financed by a combination of borrowings and draw downs from the Heritage and Stabilisation Fund, and one-off sources of income, such as the sale of assets, dividends from state enterprises, repayment of past lending (i.e. from the Clico bailout) and so on.” These measures will include the disposal of key assets.
SALE ON STATE ASSETS An offer for sale will be made by the National Gas Company of Trinidad and Tobago Limited of its residual 51 percent shareholding in Trinidad and Tobago NGL Limited (TTNGL), generating $1.5 billion. An offer for sale will be made by the Government of Trinidad and Tobago (GORTT) of an additional 20 percent of its shareholding in First Citizens Holdings Limited, the majority owner of First Citizens, also generating $1.5 billion.
The sale of 20 percent of Trinidad Generation Unlimited (TGU) to institutional investors, such as the National Insurance Board (NIB) and the Trinidad and Tobago Unit Trust Corporation, will generate $600 million. The Government also intends to pursue in 2017 the partial divestment of Lake Asphalt to an international strategic partner. Imbert spent some time on the Sandals proposal for Tobago.
“The Government has already indicated its intention to facilitate the construction of a Sandals Resort in Tobago as a catalyst for the development and enhancement of the tourism industry in Tobago and in Trinidad,” Imbert said.
He said Sandals will employ 2,000. “It is expected that Sandals will purchase in excess of $100 million annually in local goods and services, directly benefiting hundreds of local service providers, entertainers, tour guides and tours and attractions providers,” said the Minister of Finance.
Tax breaks were also announced for all approved agro-processing operations (100 per cent tax free); and public private partnerships that provide public goods and services, increase productivity and employment (50 per cent).
H o w e v e r , long-standing plans for Property Tax and a Revenue Authority were yet again announced as due for implementation in the coming year. The new public procurement scheme – in which key officials are appointed by President Anthony Carmona – is due to take effect by March 2017.