Why is Galeota crude earning less?

THE EDITOR: The budget delivered by the Member from San Fernando East raises the twin issues of expectation and systematic risk, in the allocation of resources on the basis of expected revenue for the Fiscal Year 2004 to 2005. Firstly, the budget signally failed to inform the population why Galeota Mix Crude is less expensive than the West Texas Intermediate (WTI) Crude, when in 1994 the same Minister of Finance in his capacity as Prime Minister, informed the public that there was a premium on Galeota Mix Crude of US$1.50 per barrel. The question is: What is the basis for the pricing of Galeota Mix Crude at US$32 per barrel?

There is no evidence in support of the statement, and the population of Trinidad and Tobago can be significantly short changed, in the acceptance of the pricing of Galeota Mix Crude. In fiscal terms, this erodes the tax base of the republic, and presumptively by transfer pricing, some US$20 per barrel becomes non-taxable. Secondly, the budget failed to address the differential incidence of the tax burden. In other words, how existing different income groups are to be affected by the collection mechanisms. To support our argument, the Minister of Finance said how they would tune the Board of Inland Revenue, and amend legislation to improve collection. The question remains: What will be these mechanisms, their proposed effectiveness and their enforceability?

Thirdly, the financial sector has progressed on its own initiative over the last ten years. As stated by the Minister of Finance, they have invested with capital outflows within the region, and continue to progress because of their own initiatives. The question remains: What can a Government regulatory regime execute to increase the financial sector’s productivity, and state to the nation what mechanisms can be instituted?

Fourthly, underpinning all of the three points made above, that directly affect our International Investors Rating by Standard and Poors of BBB+ and not AAA+ rating are two national issues:
1. The lack of trained management capacity to increase productivity;
2. The dire need for immediate constitutional reform.

These two points are at the root cause for our systematic risks, that is, the management of expected risk to be resolved in an objective manner. This means that the population will have a sense of safety and security that will directly impact upon the exponential decay in our crime environment.
All in all, when the population sees and has evidence in support of that they are enjoying the fruits of the nation, on any reasonable view, criminal activity will subside.

We must recall, from the mid 1970s to the late 1970s when some of the oil money moved into the hands of the entire population, the criminal situation was materially different. Mr Minister, you can remember, you were the Parliamentary Representative for San Fernando East. At best, the budget is an article of faith, without any organisational thrust to ensure, or even approach its implementation. The challenge Mr Minister is to move from rhetoric to the factual basis, to ensure efficiency in the collection of taxes and the distribution of expenditure in an equitable manner, to obtain maximum returns and social cohesion.

DR SHASTRI MOONAN
BSc, MS, MALD, PhD
Attorney-at-Law
BRIAN GARNER
Engineer/Accountant