Budgetary expectations for fiscal 2016 - 2017

“The 2017 budget should include a short term – one year and a longer term three to five year projections on what the government expects based on revenue collections. The finance minister should indicate how he proposes to close the gap if he believes the situation would continue as it is today. He should also indicate the sectors that government will support to drive earning new foreign exchange and also creating new employment opportunities.” Enill was responding to Business Day’s questions about what he thought should be included in the next fiscal package, the second to be presented by Imbert since the Dr Keith Rowley administration came into power in September 2015.

Enill also sates he expects to see “some of the recommendations from the Economic Development Advisory Board, who have been working on policies to bring the expenditure profile into balance.” Measures to ensure more effective tax collection was the focus of Dr Ronald Ramkissoon’s response to the same question by Business Day.

The economist says doing so would require the “effective use of existing tax legislation” to collect revenue from the various sources who must pay taxes to the State.

Ramkissoon adds “expenditure reduction to meet lower revenues must be a priority.” However, apart from “absolutely necessary adjustment measures, initiatives in respect of the capital expenditure programme, and initiatives for growth, must be outlined.” Business Day also asked the economist if he thought Imbert would include measures such as a further reduction in the fuel subsidy but at lower than recommended percentages.

While not directly commenting on the fuel subsidy; something which many business groups have been calling for a significant reduction of/end to for several years, Ramkissoon notes that “necessary adjustment measures to bring this economy closer to balance will not be popular.” “This is never good news to any government in office. This is partly because of how our version of democracy has operated for decades. However, to do otherwise is to court the IMF (International Monetary Fund) or worse. In any case, our history has demonstrated that supposedly popular measures did not lead the incumbent party to victory at the polls,” Ramkissoon states.

Business Day also spoke to former Minister in the Finance Ministry, Mariano Browne about tomorrow’s budget presentation.

Although he expects nothing much, “other than more of the same”, Browne says the budget speech would still be important, “if only because there needs to be a strong action plan to manage expenditures and to provide a clear direction to the country on the priorities.” Browne argues that with Imbert unable to meet all of the expenditure demands, the Finance Minister “must refuse most and institute cuts.” Looking at the revenue side of things, Browne says Imbert must consider the following: 1. The introduction of Property Tax, as “It would be virtually impossible to return to land and building taxes as suggested by the Prime Minister (Dr Keith Rowley) in his speech. Even if that were to be done, what of all the current valuations? Is the revenue department expected to forget that? 2. Increases in indirect taxes; 3. Vat to return to 15 percent (up from the current 12.5 percent); 4. Removal of the subsidy on diesel; 5. Increases in the price of utilities; and 6. An increase in the health surcharge.

However, even if Imbert did all of the above, Browne warns that, in his view, “none of this will offset the decline in revenue.” “As signaled by bptt, the renegotiation of gas contracts have to be managed carefully over the next two years and a new direction articulated. I don’t think that this can be done in the budget statement,” Browne argues, “other than to make some reference to it. More careful reasoned analysis and negotiation is required. This cannot be done in the full glare of the public and political limelight.” “So expenditures will have to be cut and there will need to be some redirection of transfer payments. On the Financing side, I expect that there will be additional borrowing from all sources and that the HSF (Heritage and Stabilisation) Fund will be tapped once again.” Regarding the Development budget, Browne says, “since there has been no clear articulation of a policy direction, with the exceptio n of TTBizLink, I expect some waffling.” Taking a more specific look at budget wish lists for fiscal 2016 - 2017, Business Day spoke with General Manager of the Public Transport Service Corporation (PTSC), Ronald Forde.

A total of 26 projects was submitted by the PTSC for funding under the Public Sector Investment Programme (PSIP) for 2017.

Given the current economic reality, Forde says “you have to temper your expectations.” As such, his priority list includes TT $3.9 million for the installation of closed-circuit television cameras (CCTV) at all PTSC facilities and an estimated TT $15 million for a new, two-storied, depot in Sangster’s Hill, Scarborough, which would be able to load four buses at once, compared to one at a time at the old facility.

A proper repair hub in Arima is also of importance. Forde explains that “our Arima Depot doesn’t have mechanical engineering facilities, so to repair a bus, you have to take it to Port-of-Spain.

What we want to do is put down a little mechanical garage that could take two buses at a time.

We estimated it would cost about TT $2 million to build the facility.” It remains to be seen how much of what was discussed here will be reflected in Imbert’s 2016 - 2017 budget presentation.